DSM-Firmenich Aktie

Good morning, and thank you for joining today's call. I'm sitting here with Dimitri De Vreeze, our CEO; and Ralf Schmeitz, our CFO. We published this morning our half year 2026 results. We hope you've had the opportunity to review the press release and the investor presentation, both of which are available on our website and includes the disclaimer regarding forward-looking statements. Following opening remarks from Dimitri and Ralf, we will open the line for questions. As always, sell-side analysts who want to ask questions have to register via the questions link, which can be found on our website in the financial calendar. And with that, Dimitri, the floor is yours.

Thank you, Dave, and indeed, a warm welcome also on my behalf for our H1 results call, and I'm happy to report good traction of our strategic action plan as we have presented to all of you in the CMD in March, where we would focus, where we would act and execute. Now a good set of numbers for H1 and Q2 on organic sales growth, EBITDA margin and cash and an outlook unchanged, where Ralf and myself will give you a little bit of color a bit later in the call. Also happy to say that our listing is active on the SIX Swiss Exchange as of the May 21, and that will be part of the SMI index as of the September 21 of this year. Now as you all know, as a reminder, the share buyback is still underway and progressing well. If we then go to the next slide to give you a bit of background on Q2.

Q2, a good growth, 6% like-for-like improvement in EBITDA margin to 19.5%. If you would correct that 19.5% for FX, the dollar and the Swiss franc, we would be at 20.2% with June in quarter 2 be a particularly strong month, reflecting improved customer sentiment around the Middle East situation where at that time, there was a bit of easing, and we've seen that reflected in orders. Now these orders are not being put into our system with any label, whether it's restocking or prebuying. But if you take the statistic pickup in June, we assume some restocking, and we need to see how that evolves over time. Now EBITDA growth was 10% in Q2, showing the operational leverage of our portfolio. Then move to H1, give you a bit of color on H1. Overall, a 5% growth like-for-like.

If we go to the next slide, 5% growth like-for-like. EBITDA margin of 19.3%, also here for the full year, quite some headwind on FX. If you correct for that, it will be 19.9%. And we also made in H1, good progress on our people and planet targets, which I referred to you in the investor presentation that is uploaded at the Internet site of DSM Firmenich. Now let's go to the next slide to accelerate financial performance. We presented this slide to you in March. And at our CMD, we now have made it actionable to act and execute. We had specifically mentioned the margin. 1% margin improvement next to the portfolio, next to the leverage, also the cost and restructuring program. We now have made that fully actionable, which will have a targeted reduction of about 1,000 positions at DSM Firmenich, where we simplify the organization and where we will adapt ourselves according to being the consumer-focused organization for the future.

Now let's move to that same action plan of the CMD into the next slide, just as a reminder, and I will zoom in a little bit on the '26 because it's our first year of that action plan, which we have presented. We're delivering a good set of results in Q2 and H1, good like-for-like sales growth, a step-up in EBITDA margin and improved cash flow. That's really good progress. It has to do with the fact that we really stick to our grow what we have, anchor what we do and deliver on our promises. And that approach, you've seen the first fruits in Q1 and now in Q2. Now our targets for '26, where we have an unchanged outlook are, therefore, well underpinned with a few good levers. First of all, our just announced self-help cost program, which we now made actionable. Second, we see ongoing good synergies and a strong innovation and a strong brief pipeline.

Also a good start into Q3. We are now at the end of the month in July. We see a good month of July. So it's a good start into Q3. And let me remind you that the FX, which was a headwind in the first half, that is easing a little bit into the second half. So now let's focus on our outlook here. You see it in the green bar a little bit. As you've known, outlook, 3 components. Let me start with cash. Good step-up in H1 2026 7% versus 2% prior year. But last year, we ended at 10.5%, a clear trajectory to the 11% to 12% cash generation, which is part of our outlook. Good progress on the working capital. You've seen that in our press release to 27.9% and with CapEx under control. Remember, CapEx is still including Bovaer, the last year that we have Bovaer investments in this year. And therefore, in that context, we feel very comfortable that apart from realizing the 11% to 12% for '26, we see a good step-up into 2027.

Then on EBITDA quality, we delivered on a sequential improvement. Q2 is 19.5% corrected for FX would have been 20.2%. FX headwind fading into H2 and some early benefits of our cost program coming in with additional leverage on the growth that will help our margin. We feel comfortable with the outlook of around 20% for 2026. And it's also positioning us in a good spot for the step-up margin to 21% in '27. Let me then come to organic sales growth. Like you've seen, good start of the year, Q2 at 6%, H1 at 5%, good start into Q3, and we see a good brief innovation pipeline, important for future sales. With that, we feel confident for H2 and therefore, reconfirm our outlook and guided towards the upper end of that range. And this will be predominantly volume driven.

Now let me also add a note to it. Please allow us to be a little bit conservative on our outlook for organic sales growth because I think in the current environment, I think you can better be a little bit more conservative. But if you look at the underpinning, I could say that, that conservative is something where we feel it's better to do it at this stage. But looking at the business, I think we feel very confident on what's happened. Now with that conservative in positioning, Ralf, let me hand over to you to give a little bit more color on the financials.

Thanks, Dimitri, and good morning, everybody. I don't know whether conservatism was necessarily connected with me. As you said, let's run through a couple of financials in more detail without being repetitive in some of the comments. Overall, a good start indeed in still a very volatile environment. So we're very pleased with that on the back of a good set in Q1. I think we're presenting a good set again in the second quarter. So overall, as you say, 5% growth, showing a nice 7% in like-for-like step-up in EBITDA. So some leverage. Keep in mind some of the one-off costs that we flagged in Q1, and that's also where you see in Q2, and I'll come to that in a second on the top of this page, overall, a 6% growth translating nicely into a 10% step-up in EBITDA for the group.

Overall, a bit of highlight and more detail around the FX result that Dimitri already alluded to. So overall, we see an impact of a little over EUR 60 million in the first half. We were just short of EUR 40 million in Q1, meaning that Q2 is impacted by a little over EUR 20 million. We see that fading a bit, but there still be a headwind into Q3 and Q4. Overall, we estimate that currently at around EUR 25 million. Now FX rates are volatile as we speak. So let's see how that will evolve. It's a little less than what we originally flagged at the beginning of the year on a bit of a stronger dollar. The reason why it's still a headwind is obviously that you have some hedge effects in there as well. And whilst we were benefiting from a bit of a tailwind in 2025, we now see that full effect continuing a bit into the second half.

Another thing that we wanted to focus on is basically the drop-through of EBITDA all the way down to earnings per share. You see that at the bottom left on the page, overall, a 14% step-up in adjusted earnings per share, given also that we previously last year, and we commented on that in our Capital Market Day in London, we had some one-off in '25. We don't see that coming back and it's nicely to Lucy that we can confirm that, so showing a nice step-up. The same for ROCE at the bottom middle. Overall, a step-up of 20 basis points. Now also here, FX does have an impact. Overall, the impact on our earnings is bigger than on capital employed. Adjusting for that, we would have seen 100% -- the 100 basis points step-up that we're targeting for and ROCE would be on a like-for-like basis, somewhat above 12% Cash, we'll come back in that in a second, but definitely a nice step-up versus prior year and 7% is a good start for the year, and that gives us confidence in the 11% to 12% target that we have.

Let's look a bit more into the quarter and into the business units on the next page, please, operator, starting with the group. As said, we basically show Q2 and half year. I'll be commenting mostly on the quarter. The full details are as usual, in the presentation on the website for you to take a look at. Overall, top line, nice 6% volume-driven step-up. Pricing, more or less flat. There's a slight positive pricing impact where we started to pass on some of the costs that we've seen, but it's offset by a slight negative hedging impact in the top line. And at the right side, you see that 10% flow-through into EBITDA. If we look at it from a margin perspective, overall, we were targeting a sequential improvement in margin. We've seen that first step into Q2, taking the margin to 19.5%. When comparing to prior year, there is this bigger impact of FX.

It's about 70 basis points in Q2. So comparing margin on a like-for-like basis with prior year, there is a headwind of 70 basis points from that FX, which will fade as we go into Q3 and Q4. With that, let's look at the performance of each of the business units in a bit more detail. Starting with Perfumery & Beauty on the next page, please. Here, we see a continuation of the performance that we've seen in the first quarter, a very nice 7% volume-driven growth in Perfumery & Beauty with a continuation of a very strong Fine Fragrance performance. Second quarter in a row, double-digit growth continuing with very nice wins and good customer sentiment. We also see that at the Consumer Fragrance side of the house, where we had a high single digit in Q1. We were able to top that to double digit into the second quarter and Ingredients and our Beauty & Care business is more stable, in line with the guidance that we provided at the beginning of the year.

So very pleased with the commercial traction that we see in Perfumery & Beauty. The same for -- from an EBITDA perspective. So we see a nice like-for-like growth in EBITDA. Here, we do see some impact of some one-off costs, especially in the second quarter. We had a fire in one of our sites, and we also have some elevated long-term maintenance, which is not necessarily recurring every quarter. And this year, we knew that we were having a bit of a lift up versus prior. So overall, the quarter was impacted by about EUR 10 million of nonrecurring costs in the quarter. Adjusting for that, both FX and that EUR 10 million made the margin at 21.5% for the quarter with an expectation to see that back up to the levels that we expect for this division going into Q3 and Q4.

So overall, a good step-up, good momentum in the business. Then on the next page, if we look at our Taste, Texture & Health business, also here, good growth in Q2. Overall, 6% volume-driven growth in the quarter. You see that at the top left on the chart with a very nice flow-through into EBITDA, an 8% step-up like-for-like. Here in the top line, 6% there is a contribution of about 1% from Bovaer. If we go back to Q1, we called out a negative impact of about 1% of Bovaer because it's a bit more lumpy, and we saw a bit of phasing. We're happy to confirm that on a half year basis, that impact is neutralized, but we did want to call that out in terms of consistency that is in there. You see a nice flow-through also then for EBITDA because Bovaer is not adding calories to the bottom line yet. That's to come for the future.

So a 5% organic growth in the Taste & Ingredient division translating into a nice 8% step-up on a like-for-like basis in profitability. You heard me say Taste & Ingredients, the growth is more or less similar in both divisions with Europe and North America improving in terms of momentum and a nice rebound in Latin America in the Taste division. If we look at it more from a segment basing, we see the strong growth that we've seen in Q1 also again in the second quarter. Dairy is absolutely benefiting from Cultures & Enzyme sales and also beverage, of course, had a good quarter on the back of the World Championship always fueling a bit of that business, too. Margin-wise, in line with guidance that we gave at Q1, back up to 20% plus. Also here, there's a negative impact in the quarter from FX. That's a little over 0.5%.

So adjusting on the like-for-like margin will be closer to 21%. But I said, we embrace the FX. It's something that's there. We'll continue to work through that, but at least we want to call that out, but it's encouraging to see the margin going back up, and we expect that to continue. Then maybe moving on to Health, Nutrition & Care on the next page, please. Also here, a continuation of good growth. We've seen 4% in Q1. We've seen another 4% in Q2. A little bit of pricing coming through. We need to pass on some of the costs. We see that here coming through. A very nice step-up into EBITDA margin also back up to above 20%, in line with the journey. We want to have a consistent trajectory in terms of reestablishing growth and improving profitability.

And here, you see also the benefit of the portfolio focus that we have in growing in the high-value segments now. If we look at it a little deeper, growth is benefiting with -- from a strong Early Life Nutrition, obviously, supported by continued good, if not very good traction in our HMO sales, clubbed with obviously the benefit from ARA, but also Biomedical continued to perform well already for quite some quarters in a row, and it's nice to see that continued going forward. If you look at it in the U.S., we talked about that before. There you see dietary supplements and eye health continues to be impacted by a bit cautious North American consumer behavior.

But also in eye health, we see some first positive signals on that front, where we're also benefiting from the repositioning of the strategy where remember that in London, we called out that we want to focus more on the online channels, and we've also been basically upgrading our -- the look and feel of our brands in terms of -- to fuel the growth going forward. Margin, as said, nicely up to 20%. The FX impact is here negative for more than 1%. So there, you can actually see that with the right mix, we have a very nice leverage into our results. Then a few words on cash on the next page, please. We wanted to zoom in. Overall, as I said, a good step-up versus prior year, 7% adjusted operating free cash flow into the first half of the year. And that includes an elevated level of cash CapEx. We guided that this year would be a bit of an elevated level as we're completing the investment in Bovaer with the plant coming to operation towards the end of the year.

But despite that, 7% step-up, whereas we achieved 2% in last year. So an encouraging start is maybe a bit underplaying it, but we're happy with that. Also a continued focus on working capital. We're not yet at the level where we want to be. We want to structurally move towards 27%, but also here, a 1% improvement not only for the first half of last year, but also at the end of the year, we were closer to 29%. So we're making traction on that front as well. Now where does that translate then into -- in terms of net debt on the next page, please. So overall, we landed at the half year at EUR 4.4 billion. Obviously, the first half is impacted by the dividend payment and also the share buyback, which is progressing well.

As Dimitri mentioned, we've completed around 60% of that share buyback. So there's some nice tailwind in stock coming still in the second half. But we do expect that net debt to overall normalize back to a level of around 1.9x EBITDA, in line with prior year. Our cash flow is seasonally much stronger in the second half, so that will nicely come in. We also have the proceeds -- the planned proceeds from the transaction coming in, obviously, offset with the remainder of the share buyback program. Now let me wrap up. So we leave time for Q&A. On the next page, please, in terms of outlook. I just want to finish on that one. Overall, 3 angles. We're ahead of the target that we set ourselves at the beginning of the year from a cash perspective, 5% growth, as Dimitri explained earlier.

So a good start. EBITDA, we guided for a sequential improvement with 19.5% in Q2. We anticipate a further step-up into the second half. So continue to progress on that. And as said, the start of the year on the cash generation gives us confidence in the 11% to 12%. So that base is very comfortable with the outlook that we've given, maybe a little conservative, as Dimitri mentioned on the sales side, which is good.

And with the restructuring, I think we're making the right choices in terms of the strategic program. Also there, we're highlighting that will set us up for a continued improvement in financial performance going forward. And maybe with that, Dave, we for Q&A.

Thank you, Ralf. Before we start with the Q&A, just a reminder on how to get into the queue. [operator instructions]. And with that, operator, you can give us the first question.

[operator instructions] Our first question comes from Nicola Tang with BNP Paribas.

I wanted to ask about the outlook and ask a couple of questions, but all around the same topic. So you mentioned there a few times that perhaps the guidance is on the conservative side from top line perspective. Can you talk about where -- which areas you're being most conservative in? And I guess linked to that, you previously said that you expected T&D organic growth to be at the upper end of your group outlook. So I guess, closer to 4%. Given you did 7% in H1, that would imply quite a big slowdown in the second half. So does that commentary still hold? Or has it changed? And perhaps you could give a bit more color around the divisional outlook? And then if I can squeeze a final one in around what you said that June could have potentially benefited from some restocking.

I appreciate it's hard to kind of quantify and understand why your customers are buying more or less. But you were helpful in Q1 in terms of quantifying a potential prebuying last quarter. So I was wondering if you could say anything about potentially quantifying that restock effect in June. And given the fact that the Middle East tensions are rising again, do you see any signs? Or are you anticipating, I guess, a bit more cautiousness from your customers with that?

Where are you? All right. Thanks, Nicola for that question, let's give a bit of an outlook. I mean, overall, if you look at the conditions also going into the third quarter, we see them similar. I mean, adjusting for a bit of the extra that we've seen in June that Dimitri will call upon. So overall, continued good dynamics. We see in Fine Fragrance very strong. We're benefiting from wins in that front and good continued consumer demand, and we expect that to continue. We originally guided for the higher end, but with the traction that we've got, we're obviously pleased with that. If you look at it from a Consumer Fragrance point of view, now obviously, a high single and double digit is at the higher end. So let's see, I think that will normalize a bit going into the second half.

So on the one hand, continued good traction on Fine Fragrance, a bit maybe normalization towards a more mid-single digit on the consumer. And as I said, Ingredients, we expected a bit more stable throughout the year. So those would be the moving pieces within Perfumery and Beauty. If you look at Taste and the same a bit holds for H&C, when adjusting for the effect of Bovaer in Q1 and Q2, the underlying growth is very much around 4%, in line with that guidance of the high end of the full year guidance. And that's also what we anticipate going into the second half. And if you package that, then you may come if you do the exact analysis and saying with a 5% start, if I then start filling up the models, then I come with a somewhat lower growth into the second half.

I think that's in general where the conservatism a bit holds. We look at the outlook for the year, Nicola, as a balance across the 3, a good start or run with the cash flow in the first half. We continue to build and work on that margin, and then you can look at it in isolation in terms of top line. But that's why we also said on balance, we feel comfortable with the outlook that we gave with maybe a bit conservative at the top line, but on balance, we're good. So expect a bit similar conditions as we've seen throughout on average in the year going into the third quarter. And then maybe, Dimitri, you balance it a bit with the outlook and a bit what we've seen in terms of extra volumes coming in, in June.

Yes, indeed. So like Ralf was saying, we don't expect a change in business conditions. So we also assume that the North American market remains a bit cautious in the consumer behavior. So that is all baked in. Now then to your point on restocking, I said it before, our customers are not labeling their orders based on prestocking, restocking or prebuying and the likes. But obviously, if you look at the statistic analysis on the pickup on your order rate, plus a little bit of market knowledge, you can drive a little bit of a feel on what it could be. I want to remind you that we said something indeed in March that was up to maximum 1% -- that didn't rewind in Q2. So in that sense, it could also be that there's a bit of restocking of the value chain. Remember, we called out destocking in the second half of 2025.

So with -- I think the world being more resilient than many, many of us thought in terms of economic results. I think that is also creating a bit of the sentiment of restocking. But like I said, it's not been labeled as such. But if you take that for our June month, and we calculated up to maximum 1% being restocking with a little bit of the value chain and the supply chain uncertainty, and we need to see how that evolves for the second half. But that's baked in into our outlook. Let me also add to that, that if we look at our brief and innovation pipeline, which I think is apart from the current market condition, plus the proxy for the future on what you can expect for Q3, Q4, but also next year. I'm very happy to say that we have a strong brief and innovation pipeline also with the global product launches as well as the regional customers are still growing as such.

So it means that it now is too throttle. Remember, initially, we said, hey, the global accounts are slowing down a little bit, and that is also helping our growth going forward. So in that sense, we feel we are slightly conservative on the organic sales growth, not only based on the current conditions, but also if you look at our brief and innovation pipeline. And if you put a number on the restocking, but don't ask me for the scientific trail, it will be up to maximum 1%.

Just to clarify -- when you say the stocking 1%, is a comment on Q2?

Yes.

Our next question comes from Victor [indiscernible] with Bernstein.

I just wanted to ask a bit more on the restocking. If you see that coming from more low stock levels in the second half of last year, is it fair to think that, that doesn't potentially unwind, if not to the full extent through the latter half of this year or even into next year? And then can you talk us through the strong growth in Fine Fragrances in the quarter? And what you think is driving those higher win rates and how sustainable you think that is looking into the second half?

Yes. Thanks for those questions. So restocking unwinding that we don't know. We don't know exactly how much is restocking. So we made our analysis with a bit of a view on the history. So -- remember in March, we also flagged the 1%, which was indeed was not unwinding in Q2. So we need to see. So that will be difficult to predict. I think if you take H2 2025, there was definitely destocking ongoing. So there needs to be some restocking over time, and maybe that has happened. But maybe you can ask the question yet again on Q3, then we can -- we have progressing insight. So that is the background. Then on fragrances, I think what is really fueling the growth is a few things. Remember that our global accounts in Fine Fragrance is about 60%, 40% is local.

That was 50-50, and we're moving towards more into local, global 50-50 by inventing and investing more in the regional accounts. Now what we have seen is that those regional accounts are really continuing to grow. But on addition -- in addition, we've seen our global accounts coming with new innovations, new product launches and that our brief pipeline and the win rate is really helping that growth. So it's next to the regional accounts. We now also see that we have a good brief pipeline win in the global accounts and fueling the growth in the fine fragrance area. That was double digit. Now Ralf was alluding to it. Can we do that till eternity Obviously, that's my preference. But I think in all fairness, you need to be fair to the whole industry and the normal growth rates that will be more into high single digit, and we expect that will moderate towards time into high single digit.

But don't get me wrong, if we can do double digit for a few quarters in a row, obviously, we're all geared up to that. And have a look at our breath and innovation pipeline, I feel pretty confident, but let's see.

Our next question comes from Lisa De Neve with Morgan Stanley.

I have 2. First and foremost, how should we think about the main EBITDA bridge items into the second half to get to sort of around 20% EBITDA margins for this year? You called out already very helpfully some one-off costs in P&B in the second quarter, but it would be great to get sort of an idea of any other plus or minus factors. And then secondly, on CCH, I mean, you called out about 200 bps of growth from synergies. Can you sort of share what you're seeing in the broader market environment? Is this very strong growth that you're delivering, I mean, clearly well ahead of peers, driven by market dynamics such as higher renovation activity? Or are there other notable factors that are really DSM specific that are sort of worth calling out?

The EBITDA bridge and then you do the synergies. So overall, thanks for the question, Lisa. So what we said at the beginning is that we'll see that gradual margin improvement for a few reasons. The easiest one is that, of course, FX is fading out. As you said on the half, overall, it has an impact of a little over 0.5% on margin. That, of course, will come down. At the same time, we also see that throughout the year, we normally see a bit of a step-up in terms of margin that's also related to the mix in the underlying portfolios and the one-off costs that we also alluded to. I mean if you look at purely Q2 from a Perfumery and Beauty point of view, the fire will not come back and also that a bit elevated maintenance that is recurring every 18 to 24 months is also not recurring. So in that sense, we have already a natural growth on that front.

The same a bit in Q1, we had a bit of those one-off costs in terms of -- in TTH that we called out of a couple of million. So that gradual improvement will come. So we do expect a step-up in margin going into the third quarter on the back of those 2 events. And at the same time, we continue to focus on growth, and we'll see the first benefit of our tighter focus around cost. And we've obviously started with that. We announced it today, but we'll expect a bit of benefit from that impacting us in terms of margin. So a few levers all contributing to the right direction. In the same time, if you look at it, for example, in agency has seasonally always a stronger mix element with iHealth in the second quarter. So there's a few dynamics in each BU. P&B, absence of nonrecurring with the continued good mix, you've seen the leverage come through. PTH with the continued growth, also there a very nice leverage.

Looking at Q2, a 5% growth ex Bovaer translating into an 8% step-up in EBITDA. We do expect that to continue with that margin to improve further towards the 20% that we guided for.

And then indeed, TTH, so let me remind you a big rationale, strategic rationale on the merger was bringing the Taste Texture and Health businesses together, where we had really the hero ingredients like enzymes, probiotics, cultures -- and those are really making a difference into trying to get more healthy food. However, if you don't have that coupled with rice taste and the flavor, I mean, even if it's very healthy, a lot of people don't take it. So the consumers expect both. And the combination is being relevant for taste, texture and health, and that's the synergy component. So we do see enzyme sales, probiotic sales, filter sales really taking off because we can add the flavor and the productability and the taste component to it.

Secondly, if you look at our segments, Rob was alluding to it, the dairy segment, which is a very important segment in TTH, about 25% of that segment is benefiting from that trend to more healthy food, low sugar, low fat, low salt, but also benefiting from the GLP-1 trend, where we look for more proteins, more fiber, more good health improving element. And that coupled is really fueling the growth on TTH. So this is structural. This is something which we will continue to see, and we will report as part of synergy. But overall, it's part of the strategic direction of TTH going forward.

And if I may supplement that, overall, TTH was the heart of where we will realize the synergies. And whilst we have good traction overall with about 45% towards 50% of synergies realized, the traction in TTH is very good and -- but there's more to come. So that will continue to support us going forward.

Our next question comes from Chetan Udeshi with JPMorgan.

Can you hear me? I was just wanting to ask on the comment in the release about 1,000 -- I think it was 1,000 job cuts that you are looking to put through. Firstly, the one-off expense of EUR 100 million associated with that, has that been provisioned? That's one. Second, is it also fair to assume that the upside that you see from these savings is not yet in the numbers and will be seen probably in the next 12 to 18 months? And second question is I'm a bit puzzled a little bit. I don't take it in a negative way. I'm just trying to get a better sense because in March, you talked about prebuying because of conflict. And then you said in June, you saw a step-up when the conflict eased. So it seems you've seen some sort of a positive on both sides.

And what I'm trying to understand is maybe there is an element of underlying strength rather than just prebuying because if you are benefiting on both sides, when the conflict starts, you benefit when the conflict is easing, you benefit, maybe there is an underlying strength in momentum itself rather than just prebuying. Would you have any comment on that?

Shall I take the cuts and then you comment on winning at both sides. So overall, indeed, have 1,000 people. So we make good progress on that front. Today, that's not reflected in the numbers. We just went out and obviously, we'll go through the regular processes, including all the works councils and the like. We'll do that carefully because people are involved around that, and it affects individuals. So we'll do that with the right caution. But that will continue to firm up. We're actively working on that now. But the benefit will come gradually, as you say. So we'll see a bit of impact in '26. But the majority in '27, we also said is that if you look at the overall margin improvement that we want to achieve is that part will come from the improved portfolio.

We're working on that, grow the right segments. We want to improve on the growth trajectory. I think there with the sets presented, we're well underway, but we also indicated that we want to support the margin with this wider program. But that will carry mostly into 2027. Then in terms of one-off costs, also that is then more to come. So today, it's not provisioned in the numbers. So we'll do that as we go. And normally, in accounting world, you can do that once it's communicated and the individuals are notified. And as I said, we want to do that process carefully and in consultation with the relevant works council. So once we do that and include it, we'll make that very transparent in the numbers that we report. Now in terms of one-off costs, overall, the costs will likely end up part in '26 and part in '27 with the cash maybe phasing a bit more to '27 than '26.

Okay. Then indeed on your restocking, prebuying, what's in the word? I think I clearly indicated that we don't know either. The only thing if you take a statistic analysis on the order pattern and you see a ramp-up, I think you can conclude certainly with the know-how of the market we have that it could be restocking. Now we didn't see the unwind in Q2. So also in June, we saw that picking up. Now in this strange world, things happen all the time, but we can check the data. So we want to be very transparent on that. We reported that for Q1. We've done it yet again for Q2. We saw that predominantly in June happening. But like you said, could this be structural yes? The answer is could be. But we want to show that we don't know it exactly yet.

I think our customers don't know it exactly yet either. But if you look at the order pattern, I think we find ourselves in terms of transparency that we need to share that with you. I mean I have a preference that it will not unwind. And I don't know. We'll see. Like I said, let's ask the question yet again in Q3, then we can tell you what we've seen in Q3. Your theory could be [indiscernible] and I would have a preference for your theory.

Our next question comes from Matthew Yates with Bank of America.

It's a bit of a high-level question really. I'd like to hear your perspective on how you're capitalizing on these pipeline opportunities that are coming in. Is this reformulation of existing products to try and save cost or tweak labels? Or are we seeing new product launches with more functionality? Obviously, the end consumer environment doesn't look great, particularly in Western markets. So just interested to get your perspective on the strategy of brand owners turning to leveraging your technology, your portfolio to drive innovation rather than discounting and promotional activity?

Yes, Matthew, a great question. And indeed, what we do see is normally in an inflationary environment, we see a lot of substitution briefs. I said it also last year. But the issue is that we do see substitution briefs, also substitution briefs in Taste, Texture & Health, where the down trading is a little bit our friend because it will require our customers to reformulate and then they need our competence yet again to see how we could make the ingredients formulation work with different ingredients. So yes, indeed, we do see substitution briefs flag that in TTH predominantly, less so in Perfumery & Beauty. Perfumery & Beauty, we really see new product launches. Like I said initially, I think in my presentation, we do see regional accounts growing, topped up with new product launches of global brands, global accounts.

And that is really helping and fueling the growth in P&B, obviously, with a good brief pipeline and a good win rate that is helping your growth. So on TTH, it is more the substitution briefs, coupled with new area of business. I call that the blue ocean. So the probiotics, the enzymes, the cultures in the dairy segment and some other products as well, where really the more healthy trend, coupled with good taste and good flavors is fueling the growth on TTH. So it's a bit of both. And like I said, it's now the substitution brief coupled up with new product and innovation launch. So that helps the strength of our brief and innovation pipeline.

Our final question comes from Alex Sloane with Barclays.

Two from me, please. Firstly, some peers have discussed sort of passing back a portion of U.S. tariff refunds to customers. I wondered if that was a relevant feature at all for DSM Firmenich as we think about pricing for the second half. I think you called out a sort of GBP 150 million hit from tariffs from memory last year, offset by pricing, I might have that wrong. But maybe, yes, is that relevant? And how should we think about pricing in general in the second half versus the first half would be the first one. And then the second one, just on the balance sheet. Obviously, net debt moved higher in the first half, but the underlying cash performance. you're pleased with you're reiterating the full year target on cash conversion and obviously, an ambition to step up beyond that.

So as the A&H proceeds are received and leverage falls as planned, how should we think about kind of capital allocation priorities in '27? Would another share buyback be the most likely route for any excess cash return?

Tariffs Capital allocation. So thanks for the question. And your number collection is good. We indicated that, that could be on a run rate basis on a full year basis. At the same time, we said that's a gross impact that we will work with our customers and start redirecting. So the net impact was much lower. We brought that well below the EUR 100 million back then. With the actions that we've done. And we also said is that we continue to work with that. So if you look at the overall net tariff impact that we incurred, we managed that down to a pretty low number. So it's a few tens of millions. I think in line with any other companies, we filed for some returns.

And where we passed it on or where we had to pass it on to customers, we'll obviously work closely with them in terms of seeing how to do that. So on an overall basis, it may negatively impact the growth into Q3 and Q4, but we expect that to be maybe up to 0.5%, maybe a little lower. On a net-net basis, we expect the net pricing, if you like, so pricing where we pass on part of the inflation net of tariffs to come out on the positive side of things. But overall, so tariffs is there, but I think we -- the teams have done well in minimizing that impact. And with that, certainly looking at the first wave of impact, it's not necessarily impacting the numbers much today. We'll see how much of growth impact it will have, but it's not really material as we see it today.

Net debt or the capital allocation. I can do that as well. Yes. So we'll bounce back to the 1.9 leverage on the back of the strong cash flow in the second half. Now in terms of capital allocation policy, no changes. We want to be disciplined in CapEx '26 is still an elevated level with Bovaer and some runoff in '27. We also said that in London, we will normalize towards 5% on that front. But that's baked into our operating ambition and focus. So we secure that, but that will normalize. Then second, dividend, we continue. You've also seen that at the beginning of the year and expect for next year a similar proposal in terms of dividend. We're confident that we will grow well back into the normal distribution rate, but I think 27% is still planned for a stable dividend on that front.

And that leaves the other 2 components, M&A and capital returns. M&A, very consistent in the story, maybe even boring. Focus is on improving the financial performance. And I think you've seen that in the narrative. You've seen that in the comments. This is what Dimitri, myself and the whole executive team is focused on. The announced cost restructuring program fits in that. So we're disciplined in the actions we're taking there. That also means we'll be disciplined when it comes down to M&A. And capital returns, I mean, we've got a good program running that will run until the end of Q3, and we'll take that topic by the end again once we close the year. And we'll remain disciplined. We want to have an efficient balance sheet. I think we communicated that. We're clear in the EBITDA range in terms of leverage that we want to keep. It's the 1.5% to 2.5% I think 1.9% is a nice leverage. So with a continued focus on improving our cash performance, yes, it's a topic that we'll carefully look at again following that.

This concludes the Q&A session. I will now hand back to Mr. Huizing.

Thank you, operator. Thank you all for attending today's call. And please do not hesitate to reach out to the Investor Relations team with any remaining questions. And with that, we conclude today's webcast. Operator, back to you to close it.

This concludes today's call. Thank you, everyone, for joining. You may disconnect.

Good morning, and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO; and Ralf Schmeitz, our CFO. We published this morning our trading update for the first quarter, which you can find on our website. Here, you can also find our disclaimers about forward-looking statements. Following Dimitri's and Ralf's opening comments, we will open the line for questions as usual. Important to remind also as usual, sell-side analysts who want to ask questions have to register via the link, which they can find on our website in the financial calendar.

And with that, Dimitri, you can start.

Thank you, Dave. Thank you for joining this call, and I will start with a few brief introductory remarks and then hand over to Ralf, who will talk you through. We'll keep it short to allow plenty of time for questions. So DSM-Firmenich made a solid start for 2026 in its continuing business against a highly volatile macroeconomic backdrop. We delivered a 4% like-for-like sales growth, which was entirely volume driven. And this represents really good performance across the group, especially in Perfumery & Beauty. We've also announced today that we will have a dual listing of the shares on the SIX Swiss Exchange as of May 21st of this year. And with a fully good start of the year, we have maintained our outlook for full year 2026.

Now talking about the full year outlook 2026, if you go to the next slide, just as a reminder, the outlook is 2% to 4% organic sales growth, about 20% EBITDA quality and an 11% to 12% cash conversion. We've seen with a solid start of the year with a good quarter 1 and also a solid start into Q2. We feel that with that start, we feel confident in maintaining the outlook for the full year.

And with that, I hand over to Ralf for a little bit more color on the business performance.

All right. Thanks, Dimitri. If we move to the next slide, please. Good morning from my side as well to everyone. Good to see you virtually online again. As Dimitri said, we made a good start to the year. Overall, 4% volume growth across our portfolio, fully volume driven. On the slide, you'll see the full walk on sales, whereas we've had a solid start with a 4% organic growth. The reported sales was impacted by an adverse impact from FX of about 6% and a 1% from M&A, which reflects the sale of our Agro Ingredients business that we managed to complete in Q1 in line with our commitment as well as the last step of the tuning actions as communicated in Capital Markets Day. So happy with that performance.

We'll zoom in into the businesses in a minute. Overall, looking at a margin, we landed the quarter at a 19% margin for the quarter. Largely in line with expectation, we expect a gradual buildup throughout the year. Keep in mind that the FX impact is about 0.4% on the margin, bringing it largely in line with last year. We did experience some buildup of cost in terms of energy and logistics on the back of the Middle East, which we started to pass on to customers, but Q1 was impacted by a couple of million on the back of that, explaining the margin. And as I said, we'll expect a gradual improvement throughout the year.

Let's then turn to the businesses on the next page, starting with Perfumery & Beauty, a very beauty start of the year, a strong performance with an 8% step-up in volumes. A very strong performance in Fine Fragrance with a strong double-digit growth. We've seen the buildup of momentum that we've seen building up in the second half of the year. Growth continues in that space, and we're capitalizing also on the wins that we see nicely coming through. Consumer Fragrance saw a high single-digit growth in the quarter. Here, we also see some acceleration of orders from our customers contributing overall to -- it's always difficult to estimate.

We think about an impact of up to 1% on overall group results with a little higher in Perfumery & Beauty concentrated in our Consumer Fragrance space. Ingredients performed in line with expectations and as guided for at Capital Markets Day, overall, we expect a low single-digit growth with -- which is normalizing throughout the year, and we've seen that in Q1 with a low single-digit growth in that space. Worth noting here is that on the UV filter side, albeit at the low end, we're back to positive growth, which is something that we were anticipating as well, and it's good to see that, that comes through in the first quarter too.

Looking then at the margin, overall margin came in at 22%, a little above average of last year, largely in line with Q1. No big moving piece on this front, a nice step-up in absolute. But obviously, also here, we've seen a few million of costs coming through, which we started to pass on to our customers as well, and that will be neutralized fully in the second quarter.

Then moving on to Taste, Texture & Health on the next page, please. Also here, a solid start of the year. Overall, a 3% volume growth in both our Taste & Ingredient business in Taste, Texture & Health. Synergies continue to contribute positively as well. As usual, it almost becomes boring. We see a little over 1%, between 1% to 2% contribution on that front, overall performing very nicely, and the pipeline continues to build well on that front. Now you'll say, Ralf, you're talking about the 3%. I see on the page only 2%. There is about a minus 1% from Bovaer that doesn't necessarily come evenly distributed throughout the year. So that's a bit chunky. We now report that in Taste, Texture & Health. It had a negative impact of about 1% on top line and about 0.5% on the margin, but we expect that to be fully neutralized on the half and we'll see a good contribution in the second quarter.

Overall margin, TTH started a little lower in the year. We anticipated that on the back of FX adjusting for -- if you look at it versus prior year and in line with the average of last year, margin is about 1.5% lower. As said, 0.5% is coming from Bovaer, 0.5% is coming from FX. And also here, we've seen a few million of costs come through, which we're passing on to our customers. And for the second quarter onwards, we expect to be back at a 20% level in Taste, Texture & Health. So also here, an encouraging start of the year.

Then last but not least, on the next page, please, Health, Nutrition & Care. Also here, good growth, 4% like-for-like growth in the year, strongly driven by Early Life Nutrition, good momentum in HMO. We've seen that build up following the approvals that we got, and that is nicely continuing into the year. Obviously, Q1 also saw a bit of tailwind from the ARA sales where we're obviously working with our customers to help them as much as we can. And as indicated at Capital Markets Day, we expect a bit of tailwind throughout the year on the back of that, but also longer term, this will translate into a good contracting in that area.

Overall, our U.S.-based businesses, dietary supplements, eye health continue to see cautious behavior in that sense from a regional perspective to give you a bit of color on that. And then translating that also to the margin development, a nice continued step-up in margin overall, 19.3%. I do want to call out the same as I did at Capital Markets Day, the impact of the FX is the biggest overall, it negatively contributed around 0.7% on the margin. Adjusting for that, we would be at the 20% in line with what we've seen throughout last year.

On the other news on the quarter, no slides on that, but the guidance that we gave in Capital Markets Day around the housekeeping still stands. So no surprises on that front in Q1. So that can continue for modeling for the rest of the year. And with that, let me keep it short and leave time for Q&A. So Dave, why don't we open the call for that.

Yes, Thank you, Ralf. We can start with the Q&A. Maybe again, as a reminder that, sell-side analysts who want to ask questions in the Q&A session need to register via the questions link, which they can find on the website in the financial calendar. And all other participants can listen into this Q&A session by staying in the Zoom meeting. With that, operator, we can start.

[Operator Instructions] Our first question comes from Nicola Tang with BNP Paribas.

I think I'll start on the advanced orders, I guess, no surprise to be asked about this. I think you mentioned you estimate a 1% impact to group for Q1, if I heard you correctly. I was wondering if you could help us understand, I suppose, how you're calculating that?

And secondly, you mentioned it's mainly in Consumer Fragrance. Can you help us understand why? Is it because people are most worried about the supply chain there? Is it where you're implementing the biggest price increases? I would have thought that customers might be more concerned about areas like fragrance ingredients or beauty ingredients or maybe even vitamins, stuff that -- where the industry supply is quite concentrated in Asia. So do you see advanced ordering in these areas? Or can you explain why not?

And then maybe the second one, could you help us understand what assumptions you're making in terms of pricing and input inflation within your reiterated guide? Just help us understand a bit more [ related to ] the basket of inputs and how quickly you expect to implement that pricing?

Thanks for that question, Nicola. So I think the last one will be taken by Ralf. Let me give you a bit of context on the prebuying, indeed, fair challenge. How can you define prebuying? Well, basically, none of the orders which are filled in are being -- saying this is prebuying, it is not prebuying. This is more like looking at the order pattern, and therefore, we define this as prebuying. We saw a bit of an acceleration of the order pattern for delivery towards the end of March, which is out of the ordinary and predominantly in Consumer Fragrance out. I will try to explain a little bit why that is.

So we assume that is a part of prebuying compared to the normal seasonality we have seen. Now the majority of the customers are more into concerned supply chain issues and not so much yet in pricing. I mean, pricing in Q1 was hardly impacted only on freight and a little bit on energy, as Ralf was saying, and that was very transparent and not new. What you will see in the consumer fragrance predominantly is that if you have launched a big project and you cannot deliver because you don't have the solutions we offer with the ingredients, then obviously, there's a lot at stake. So these customers, these big branded customers are not taking any risk. And therefore, some of them have prebuying predominantly in the Consumer Fragrance. And that's what we have seen and that we spelled out. So we estimate, so it was not a guarantee, but we estimate that had to be more or less maximum 1%.

Secondly, be aware that you mentioned pricing, is that prebuying on pricing. That's not the case. Remember that in our business model, pricing is only a minor part of the overall costs. The biggest concern is the security of supply. They make their margin on their end product or they can't supply the ingredients that is at risk.

Last but not least, you know our business model by now a little bit. Our model is not allowing any massive prebuying. I mean we have tailored products. We have customized products. We have more than 5,000 ingredients, which need to be customized as such, a lot of make-to-order. So even if people want to prebuy massively, our model is not capable in doing that. So I hope that gives a little bit of background. And then maybe for you, Ralf, a little bit how much impacted and what we have assumed.

I'm happy to take that. So overall, what Dimitri was highlighting as well, Nicola, we've seen some upward pressure around supply chain and energy. To put things in perspective, we indicated that our energy bill is around 1% of top line, a little over that. So give or take, around EUR 100 million, we've seen some upward pressure. The same on logistics, obviously impacted with cost going up. We're passing that on with surcharges. Q1 has seen a bit of an impact given the time lag of passing that through.

Overall, in our outlook, we assumed few tens of millions of impact, and that is something that we're confident in offsetting. At the same time, you see somewhat inflationary pressure was more concern around security of that. We've been focusing on securing that to make sure that we can fully deliver to our customers, and we've been successful in that. But given the nature of the industry, we will be able to pass that fully on.

Let's see how it overall develops going into the quarter. I think there's still a bit of questions around that. We're, therefore, sourcing a bit more shorter-term to keep track on those developments. And if we see that come through, we will be fully pricing that onwards towards our customers over time. The business is fully on that and monitoring it. But short term, focus very much on ensuring the delivery and that we've got all the material that we want in order to look at the supply.

If you then translate that into the outlook because I think that's the underlying question. So overall, with a good start in Q1 and a solid start in Q2, and we'll see a bit of support on the OSG from pricing as well. Obviously, margin, as I said, we expect a gradual buildup throughout the year. So that will require a bit more work with the inflationary environment and the FX where we're heading today. FX was predominantly strong in Q1 with about EUR 40 million of impact. We see somewhat around a little over EUR 20 million in the second quarter, so bringing that impact to about EUR 60 million in the half. And then there's another EUR 10 million to EUR 15 million per quarter in Q3 and Q4. So that will level off on that front as well. And on cash, we've got a few levers to manage. So hopefully, that gives a bit of color on what we baked into the outlook.

Our next question comes from Alex Sloane with Barclays.

Two from me, please. First one on Early Life Nutrition within HNC. Nice performance there, and you're flagging ARA already as a tailwind. I think at the Investor Day in March, the message was that, that tailwind really was going to build probably from Q2. So I just wondered whether that was still the case. And how we should think about the kind of the magnitude of the potential revenue opportunity in ARA as a result of the recalls and whether you would expect that to be kind of a permanent share gain or more of a kind of a one-off tailwind this year? That's the first one.

Second one, just on the follow-up really on the prebuy comments. Thanks for the clarification on the scale of that. Should we be expecting a reversal of that 1 point tailwind at some point this year? Or I guess, when might we expect that?

Let me take the ARA one and then you'll comment further on the prebuy. So on the ARA, thanks for that, Alex, question. Indeed, we expect that to come through in Q2. Now obviously, given the need of our customers, we went all the way to free up as much as material as we could to support them. At Capital Markets Day, I indicated that the tailwind for the year is expected to be around 1% on top line growth for HNC for the year. That still stands. At the same time, you're spot on in terms of your question, will we see has some further benefit in the years ahead? And obviously, that's part of the conversations with our customers as well, where we basically see a request for further volume also in '27 and '28. So at the same time, we're concluding longer-term agreements around that. And we have -- we're looking at to see how we can create more space in our plants to support them where needed. But for '26, pencil in about 1% of top line on HNC on the back of the benefit from ARA.

Yes, Alex, and then maybe on the reverse prebuying. So in a world where there is accumulated uncertainty and where there's very low visibility on what's happening, we don't expect on the short-term reverse prebuying. On the other hand, I mean, there's a reason why there's reverse prebuying because you're concerned about getting access to your ingredients and solutions. So in a perfect world, that will reverse. Now you hear me say that we also had a solid start into Q2, so we don't see that effect yet, and it's very difficult to forecast when that will happen. It will be more or less the same if you ask me to forecast when the world become a little bit more certain place with a little bit [ greater ] predictability. And I've stopped making any remarks on that phase. So a good question on reverse prebuying as well.

Our next question comes from Lisa De Neve with MS.

I have two. The first one is on the dual listing. I mean it would just be great to hear your thoughts on why you're pursuing that dual listing right now? And what are the goals of pursuing this, but also what you aim to achieve with this and whether over the very long term, you aim to sustain your Amsterdam listing? That's my first question.

And then secondly, back to Perfumery & Beauty. I mean, you delivered very strong performance. Can you just share to which extent that's already driven by the new wins you've obtained in Fine Fragrance? And how we should expect that to last through the year, whether actually these volume strength will continue through the year?

So I'll take the dual listing, P&B. So thanks for the question. Now it's something that we wanted to pursue already a bit longer. We've been working on that in the background. At the same time, we said that let's also pursue that once we've transformed the company to DSM-Firmenich going forward, so following the completion of the sale of ANH, that is something that we wanted to do.

Now the additional work resulting from that, given that we've got the listing in Amsterdam was limited. That was a condition to us as well that we wanted to basically create additional traction and also basically access a market where we have a strong home base. I mean, if you look at the company, there's a strong heritage in both the Netherlands and Switzerland, and we want to capitalize on that. And so hence, the pursuit of the second listing. It gives us access to an investor base that we can't have access today. And with that, we expect further volume flow in the stock at basically a limited effort.

Now it's clearly a dual listing. So we have no intent to withdraw from Amsterdam. So it will be something that we have active in both places, coupled also with an ADR program in the U.S. So we basically optimize our offering to our investor base and make use of all the available capital and through that support float of the stock. So it's been part of the plan, but was kind of put on hold until we've completed the transformation, which we can then actively roadshow also in the Swiss market, which is an interesting space for us as well, given the strong presence in both countries.

And indeed, maybe on the wins, thanks for that question. I think we have a very strong brief pipeline. Remember, Emmanuel was on stage during the Capital Markets Day presenting that. I also remember that there were question like, okay, if that strong brief pipeline is there, when do we see that back into organic sales growth? Well, I think we, at that time, radiated quite some confidence, and I'm very happy that we could report a very strong quarter 1. It has to do with wins we've got in 2025 and now result in business in 2026.

Let me also remind you that we had low single-digit growth on ingredients, the fragrance ingredients. And I think in the broader context, that's an important element to the wins. I can tell you that the last wins we've made in '25, but also into '26, we're very successful because we have launched a new -- innovative new ingredients, which we own ourselves, which is part of our business model in going forward. So yes, I think a very strong start for Perfumery & Beauty, predominantly because of the good brief pipeline, but above all, also because of a very good win percentage on these briefs going into Q1 with confidence for the rest of the year.

Our next question comes from Georgina Fraser with Goldman Sachs.

My first one is, honestly, as a team, I think you're really well-placed to manage the supply chain issues that we're seeing on the back of the Middle East conflict because of the experience that you've had in the old DSM portfolio and also still in discontinued operations in vitamins. I would really love to hear your read on the challenges that we're actually seeing today. Are we facing potentially risks of shortages of products? And what would be your time frame for that related to the closure of the Strait of Hormuz?

And then my second question was you flagged U.S. consumer weakness around dietary supplements in particular. Could you give us your read on the health of consumer demand into the second quarter by region?

Thank you for that question. And indeed, you referred to the experience of legacy DSM, but I can also remind you that the legacy Firmenich also had quite some experience in handling COVID and inflationary context. So I think we're well set. Like Ralf was saying, in Q1, we saw freight and energy costs going up, and we immediately took action and priced that in with full compensation in Q2. Like Ralf was also saying, what we have seen is some increases in raw material costs. We saw that in [indiscernible], and we immediately took actions there. So I think it's -- this is about agility. I think nobody knows which type of derivatives from oil will hit the most. The only thing is that you need to prepare yourself to act with agility and going forward. And that's what we've done. I think glycol is a good reference. I think we did not miss an order because we didn't have access to glycol, which is a key raw material in the whole consumer space, and you can see that in our organic sales growth. So I think it's more about attitude and agility, which we have on the organization DSM-Firmenich as a whole.

Then secondly, on your North America space, very interesting. Indeed, we flagged North America cautious consumer behavior. Europe in all of this is still relatively stable with, I think, a good context in Asia. Now we flagged it predominantly because of Health, Nutrition & Care, which has a big exposure in North America because of biomedical and eye health and the likes. We don't see a deterioration, but we don't see a pickup either. So the consumer behavior, which is still cautious. But in that context, we've taken actions. Eye health has seen slight growth in that cautious consumer behavior. Biomedical is doing relatively well. So I think we also there took actions to do what is needed to drive growth in a difficult cautious behavior consumer context. We don't expect any change towards the next coming quarters unless the world becomes a safer and easier place going forward. So we feel we're well positioned. But fair, North America is cautious consumer behavior. Europe stable and Asia, pretty okay.

And if I can add to that, keep in mind also the comps in both TTH and HNC, where we saw a very strong Q1 last year with 7% and 6% growth with the strong dietary supplements that we called out at the time. So that's to be seen in that light as well.

Our next question comes from Chetan Udeshi with JPMorgan.

I just wanted to dig a little bit in your P&B margin. Very strong volume growth, 8%. I was just trying to do some math, I would assume this is a business probably with the highest gross margin. So if I take 45% gross margin on your incremental volumes, that should be something like EUR 35 million EBITDA uplift even after FX, we should be close to EUR 20 million. I'm a bit puzzled with the lack of operational leverage in the P&B business. So maybe if you can just help us, sort of, bridge the key moving parts. You talked about cost, but they don't seem that big in the context of the lack of operational leverage that we saw in Q1. Nothing to take away from the strong volume performance, but perhaps you have expected to see better margins there from that volume?

And the second question. When you talk about solid start, are we to interpret that to be similar to Q1, 4% growth into Q2? And any color on how we should think about margins in Q2 should be similar to Q1? Or would you expect a progression, sorry, from Q1?

All right. I'll take the P&B margin and then you maybe can voice over a bit the start of the second quarter and what we expect there then. So overall, margin of 22%, it's somewhat above the average of last year. So we do see an improvement on that front. The leverage is a 5% step-up in margin. Now a few bits and pieces, and it's, yes, I would say, a small impact across the board, whether it was FX, whether it was some additional costs coming through that we're passing on as indicated with a time lag. And at the same time, we continue to invest for future growth. I mean that is also something that we continue to do. So that is also something that you witnessed in P&B. We've seen that. We've highlighted that also last year that we're setting ourselves up for continued growth in the front and with that.

All of those pieces have a little impact on the overall margin, but we have the ambition to move up, but at the same time, do it in a responsible way to make sure that we capitalize on the growth because ultimately, that will be the driver for the profitability, and that is something that we now see coming through. So it's a bit of those moving pieces across the board with the ambition to continue to improve the margin and with that, so you see the operating leverage but at the same time, it is offset by a few things that we're either passing on or is a deliberate choice at our end.

And then to your second question, let me give an outlook per quarter for every business, but we have an outlook for the year, 2% to 4%. You hear me say that we had a solid start also into Q2. So we feel confident on that outlook for 2% to 4%. I think it's fair to say that we expect P&B to be a little bit on the upper end of that outlook and then a little bit better than what TTH and HNC will bring in.

And then in terms of the margin, overall margin, I think TTH, like Ralf was saying, I'm trying to reemphasize that, a bit of Bovaer effect. And we have the orders in for Q2. So you will see a step-up on the margin of TTH into Q2, and that will move more towards the 20% with all the actions taken. So that is on TTH. I think for the rest, we were happy with the margins on HNC and P&B. And remind you that for the group, the negative FX effect was the biggest in Q1, what was alluding to that, and it will be slightly less for Q2. And then I think it will be phased out throughout the second half of the year with only a minor effect. So with that, I think we made the link to our outlook and maintained, therefore, the outlook because we feel confident with what we've achieved.

Our next question comes from Matthew Yates with Bank of America.

A couple of questions, please. Maybe just to follow up on that margin progression point, Ralf, you've called out a few moving parts here over the coming quarters. If you wouldn't mind just recapping how that margin is going to trend up over the coming quarters. It sounds like you're sort of catching up with the lag on cost and pricing. And then to some extent, there's some mix and maybe some underlying cost actions but if you wouldn't mind just sort of recapping so we can have confidence in that trajectory.

And then the second question on TTH. In the press release, I didn't see any sort of discussion of different product categories. And in particular, I wanted to ask you about dairy because it was something you highlighted at the CMD a month or so ago. We've seen some of your peers continue to report very good growth in dairy. Are you also capitalizing on those opportunities?

Right. You want to start with the dairy?

Indeed, good question. It's a trading update, so we didn't want to give all the details on the segments. But I really reconfirm what you just said and what we said in the CMD. The dairy segment is a fast-growing segment on the back of consumers to be more linked to health. But also the GLP-1, I said it in the CMD, this is something where I think the dairy segment is seen as a very positive contribution to it. Obviously, with culture and probiotics as an interesting product for us. So no, I would like to reconfirm that dairy is a winning segment. And I think I just need to remind you there that we're definitely the leader in the dairy segment in the TTH space, and we benefit from that.

All right. Then on the margin trajectory, I mean, overall, from the group, we anticipated that. I think one of the key drivers is the FX, which had the strongest impact in the quarter. But as I said, that will fade out with half of the impact in Q2 and even less so in Q3 and Q4. Now typically, we always see an improvement in the margin throughout that. But if you look at specifically Q1, Matthew, I mean, TTH has an impact on the overall margin from the group as well. So if you were to adjust for those one-off costs in the bits and pieces that we will be passing on. And with that neutralized into the second quarter and onwards, and also adjust for that impact of Bovaer in TTH, you would see that actually the margin will be above the 19.5% towards the 20%, and that is something that we see throughout the year.

So I expect a gradual improvement. So overall, we feel comfortable with the guidance that we gave. So we feel that, that is balanced, but you'll see that coming through nicely with the actions that we're taking and passing that onwards. So that adverse impact of a couple of million, coupled with Bovaer in TTH will fade out and expect a gradual increase to be in line towards the guidance that we gave.

Our next question will come from Artem Chubarov with Rothschild.

I've got one on Bovaer, please. Just trying to understand the technicalities really. So just to make sure I understand, so 1% was the impact on organic sales in TTH and from memory, this is about what the business represents in total sales. Does that mean that the entirely quarterly volume was shifted in another quarter? And is that typical? Obviously, you never reported that with TT&H before it was part of H -- Animal Nutrition. So just trying to understand, is this something we can expect going forward? Or is it something extraordinary? And maybe generally for Bovaer, how do you see sales progressing for the rest of the year and maybe where you see profitability for this business? Because I think you mentioned that it was operating at the breakeven given that volumes are obviously very low. So where do you see profitability getting from here?

Yes. Thanks for that question. Indeed, Bovaer, it is -- it can differ per quarter, but it basically will not differ for the year because you basically need to have your year quarter. So last year, we had EUR 40 million sales. This year, we expect maybe even slightly higher. In this case, we're sold out because we're building that factory -- will be kind of complete towards the end of the year. So this year, we will see around that same sales number, EUR 40 million, EUR 45 million. Last year, in '25, we had, just to be precise, about EUR 13 million of sales and EUR 7 million in quarter 2. We've seen EUR 7 million this year in quarter 1, and we have the orders in for Q2.

So now it's more or less reversed EUR 7 million and EUR 13 million. So that's part of the deal for the whole year, you can expect EUR 40 million, EUR 45 million with indeed about breakeven on results because that's something where we are in the intermediate phase. So no surprises there, only some changes throughout the quarter.

Our last question comes from Charles Eden with UBS.

I just wanted to ask on ANH and vitamin price. I appreciate this is a continuing ops update, but vitamin prices have obviously spiked. I guess costs have also gone up, particularly energy in Europe. Is it fair to say the move is advantageous to profitability for ANH and I guess, cash flow for this year, given you've still got 100% of the cash flows. So that was my one question. And then just a very quick clarification, a bit specific. You talked about strong double digits in Fine Fragrance. The strong double digits for DSM mean mid-teens? Just sort of -- I don't want the exact number, but just an idea of what strong double digits means?

Let me take the discontinued and then Dimitri will give you the exact number on Fine, Charles [indiscernible ]. No, absolutely right. I mean you've seen vitamin prices go up 30%, 40% across the board, which is obviously helpful for overall achieving the results. Now there is a cost component to it. You're absolutely right in that in terms of costs that will go into premix, but also at the energy side. But obviously, this is a much more balanced picture than what we've seen before. I mean, if you go back and rewind the clock a few years back, then we saw predominantly energy and costs go up in Europe, whereas I think this is more of a global development where China is impacted.

So we're happy to see the prices go up. And as you say, we are still the owners of that business throughout the year. So it will help. We're managing the business for cash. That hasn't changed, and that is something that we're focused on. But obviously, this environment is overall supportive to the business in 2026. And in the annex, we put the results for discontinued in as well for reference and for modeling. But we clearly indicated that we had an anticipated weaker start of the year, but we expect a strong pickup in the quarters ahead on the back of that improved pricing.

Indeed, Charles, I mean, very funny that you're still so much in love with vitamins, but I appreciate your question. I'm pretty sure you also follow Feedinfo and you see vitamin E prices went up from $5 to around $11. I think that's pretty much enough to compensate the slight cost increases. So like Ralf was saying, we're happy to see that the vitamin prices are normalizing.

Now then going from one end of the range to the other end of the range, you really go from vitamins, Animal Nutrition to the top end Fine Fragrance. Yes, indeed, double digit. My preference is that it's mid-teens, even maybe high teens, but it has been low teens. Remember that Fine Fragrance, we normally guide towards the high single-digit norm right now. In quarter 1, we had low teens, double digit. I'm very happy with that. And we'll need to see how that continues to fare throughout the year. But we clearly indicated that we have a strong brief pipeline and good wins. But to your question, it has been low teens for quarter 1.

Yes. That brings us to the end of the Q&A session. We don't have anybody in the queue anymore. So operator, I suggest we close this session and we move on.

This concludes the Q&A session. I will now hand back to Mr. Huizing.

Yes. Thank you, operator. Dimitri, do you want to make some closing remarks?

Well, not really. I just want to remind you that despite what's going on out there in the world, we really focus on what we promised in the Capital Markets Day. We focus, we accelerate and we execute, we grow what we have with an organic sales growth for the outlook, 2% to 4%. We anchor what we do, implementing our cost programs, focusing on the cash with the EBITDA quality about 20% and deliver on our promises. And I think we had a solid start into the year with a good quarter 1, moving into a good start into Q2.

And with that, I'm very happy to see that we maintained our outlook in a continuous crazy world. But I think we are very much geared up to that and hope to speak to you soon in the road or otherwise again during our half year results. Thank you for that.

Yes. Thank you, and that brings us to the end of today's call. Thank you all for attending the call today. Please don't hesitate to reach out to us if you have any remaining questions. And with that, we conclude today's webcast. So operator, back to you.

I need to do that with the usual disclaimer, and then I need to wait for about 10 seconds. I think nobody is interested in the slide, but we need to do that. So we do that. So disclaimers are made, ticking the box, Ralf. So I think with that, let's move on with the live webcast started as we speak and also hear a warm welcome for you at the Investor Event 2026.

Now let me lead you through what you can expect from us today and from me. First of all, we will start with a presentation about the context. I will do that a little bit where we are today, a path forward. Secondly, we will have then the 3 business unit presidents here to talk you through their growth path for their 3 respective businesses. And last but not least, at the end, we will have Ralf, who will dot the Is and cross the Ts, which I like in English expression, for all the details, the financing part, et cetera. We will have, after every business unit, a small Q&A opportunity focused on those businesses. And then we will have a full Q&A with the full executive committee later after Ralf has finalized the presentation, and we are here for you all day.

Now, I'm not sure what all the means, but we are open for any question. There is no time limit to it other than you maybe have time restrictions. Because I think in today's world, it's important to take time to run through transparently where we are today. And I think we have a lot to talk about.

Now with that, I will speak a little bit about the journey. Be very brief, because we've done the transformation we've done with the transfer man. We're now the company we aspire to be, and we want to accelerate that company in terms of growth, in terms of EBITDA margin and in terms of cash.

I will look back a little bit on the past. Give you a little bit of background on Animal Nutrition & Health. You had raised a lot of questions. Ralf will also come back to that. I will give you a little bit more insight. We'll also give a little bit of an update where we are in terms of the tuning of the portfolio. Also that is almost done.

And then the last bit is about synergies, cost synergies and revenue synergies. And that brings us in today. Today, 2026, and we will give you an outlook on 2026 today. And clearly, around the parameters of a consumer-focused company about organic sales growth, about the EBITDA quality in terms of percentage of margin and about the cash conversion in terms of percentage of sales. And that brings us into beyond. And I hope I can clearly clarify what the pathway is towards our midterm targets for 2028 and beyond.

So that's a little bit on the agenda for me today before I hand over to the business units.

Now this is the slide also internally, I used quite frequently, and this will be the last time I will use this slide. You will never ever see this slide from me again. Maybe Ralf in his presentation just lost once, but this has been our journey, and we are now going from the merge to the focus to the tune to the accelerate phase, so we have done the portfolio transformation. We've done the integration of the company. And now we're going to grow what we have. We're going to anchor what we do and we're going to deliver on our promises. That's the starting point for 2026 with a clear focus for 2026 and 2027.

Now before we fast forward to today and beyond, a little bit of background on the animal nutrition and the Animal Nutrition deal. I think we failed to share with you the context in which we've done this Animal Nutrition & Health deal. It was clear in the second half of last year that the profitability of that business on the vitamin side was deteriorating. And that really stressed the fact that we had to split the Animal Nutrition in the solutions go. That's a specialty bit and the essential coal, which is the vitamin part. And if you clearly look at our reports, you do see that the profitability of A&H in total has deteriorated from Q3 to Q4 and itself. In that context, we were negotiating that deal. So therefore, it took longer than I have hoped for, but I think we want to shape the context which we did. And within that context, I'm very happy that with the necessity for splitting the company, we could make the deal with CVC, where we have clearly mitigated the downside, the volatility and yet again the second half of 2025. It showed the volatility of it. We mitigated the downside because we have 2 things. One, we have made a favorable supply contract for decent finish and we created an upside in case business would normalizing via the earnout. And the earn-out is in line with what we call market standard private equity money multiples. And Ralf will give you a little bit more insight on how that earn-out has been built up. And secondly, we have retained a 20% ownership. Why? Because we wanted to benefit from that normalization and benefit from that valuation itself. We've done that many, many times before. We have divested materials. We've divested caprolactam, we divested acrylonitrile. And many times with this construction, which has been very favorable for us if you look back. So this is the value creation, the value creation upward we do see. Ralf will give you a little bit more details around that.

Then secondly, on the tuning of the portfolio. Remember that during the review of Animal Nutrition & Health, where we decided because of the volatility and the capital intensity, we had the opportunity to also look at our portfolio. And we deliberately decided to move away from a few pockets which were either commoditized or volatile. I'll give you an example on the Auroma nondifferentiated aroma ingredients that has gone with ANH. That's been attacked by the Chinese. We knew that. We knew that volatility was there. We brought that into the deal with Animal Nutrition & Health. Now also nondifferentiated vitamins, but also earlier reported use extracts and marine lipids. And the only small bit agro ingredients is on the brink to be signed. So also that will happen within a relatively short time. So the tuning of the portfolio has also been finalized. So Animal Nutrition and help me finalize, tuning of the portfolio have been finalized. And that is now a clear path forward to accelerate to grow what we have.

Now in that bit, the third bit on that journey, A&H tuning was also the synergy part. Remember the EUR 350 million, which many of you said, let's see if they deliver. We delivered on that EUR 175 million cost part, when you say that's the easy part, but we delivered. The second part is the synergy revenues. Now you will have the BU presidents here on stage. You can ask them all about synergy revenues, but just as a synergy check. Let's look at TTH, Taste, Texture and Health, Mauricio Clementi is the BU President. The majority of the synergies on revenues were in TTH. We always said that about 60% of the EUR 500 million top line. And if we look at the growth rate of TTH over the last 2 years and we compare that with peers, then we have outgrown the market with about 2%. So the synergy revenues are obviously sinking in. And we are halfway that path and you see that we are very confident that, that synergy revenue continues to 6 and 7 onwards.

Now having said that, we did not forget about sustainability in that journey, you could say, in the current environment, who cared about sustainability. But the interesting is our customers do. Our customers do care about sustainability. They require us to report about sustainability to be on their core lists. So we did work on sustainability quite a bit. We merged the company's created data sets, and we're very happy and proud that we have the CDP AA rating on water and climate. And also, Ecovadis, the highest ranking you could have, which is platinum. So you do see that sustainability is important. And I think also for you watching our company, you should also ask the question, what is happening with the employees? What is it with their engagement with so many changes. We checked that on an annual basis. And I'm also very proud to say that our employee engagement has been very stable around 80%. With all these changes, and 80% is really in the upper part of the rating of companies that test their employee engagement. So we also made good progress on sustainability, not because it's a requirement, but it's because our customers really care and want to see us to improve.

Now let's leave the past. Let's leave the journey. This is it. So what do we have? What is it what we have built. We have built a company that is EUR 9 billion in size, EUR 9 billion in size. That creates economies of scale enough to invest in platforms, in R&D, in innovation platforms. You need to have that scale to do that. EUR 9 billion is a very good scale in our industry. Now what do we do in terms of growth. We've grown about 4.5% per year. So that is in the organic sales growth. I think appears around 5%, so in line with the industry. We beefed up our EBITDA margin. I'll come back to that in a minute from 14, close to 20. And we delivered, if you correct for FX, we'll come back to AFX in a minute, we delivered a EUR 300 million EBITDA step up from 23 to 25. So it is a strong business already, but it needs to accelerate. And that is what we're going to do. And how we're going to accelerate that is building and grounding it in our business model. And before I go to all types of numbers and financials, I want to spend a little bit of time with you on why it is so unique, what we're building. And it has to do with our business model.

And let's go back to the middle of that slide first. So think about the specialty ingredients and the creation innovation. And then I'll come back to the outer columns in a minute. This is the core of our business model. And we made a deliberate choice to invest in the ingredient toolbox and more creatively, it's called duplet. And we built a fantastic creation capability. And those are perfumers, flavorist application specialists close to the customer.

Now that is more together via a brief system where regulatory requirements are important, where delivery systems are important and where the ecosystem is important. And we made at DSM finish a deliberate choice to invest in these 2 anchors. So we're not a company that only innovates and invest in ingredients. So we're not an ingredients company Pusan. There are some of our in our industry who really focus only on ingredients. We feel the ingredients need to be coupled with creation with perfumers, flavorists and application specialists, understand what is needed in compounding, who does understand they need a formulation.

Let me give you this example. If we go to customers and we get our briefs, and we have great perfumers, great flavors and great application specialists, but they have a mediocre toolbox of ingredients to play with because they can only buy it from the outside or they source then they will not win brief. Also, on the other hand, if you have a fantastic toolbox fantastic pallet with the best ingredients in the world and even some proprietary captive ingredients, nobody can get. But you have mediocre flavorists, mediocre perfumers and mediocre application specialists, you will not win enough brief. We feel that a business model, which is built on 2 legs is more future-proof than a business model that is built on 1 leg. And that is a fundamental strategic choice we've made, and we stick to that. We invest and innovate in the creation capability as well as ingredients. And I'll come back to that in a minute because there are lots of questions about, yes, but these ingredients are attacked by the Chinese. Well, that is not the specialty ingredients as we talk here, but we'll come back to that in a minute. So that is the key of our business model. And that is coupled with 2 elements to supplement our strategy. First of all, we made a deliberate choice where we think the world is moving towards in 3 to 5 years and what they need. And that is -- and you see that on the right-hand side. That is biotechnology, move away from synthetics into biotechnology, invest in receptor and sensor technology. So how is the flavor and fragrance impact your receptor and sensor technology capabilities?

Thirdly, about health, a lot is still unknown about microbiome. It's the next step in terms of building new businesses, and that is really helped and supported by data science, NII. And this is valid for all our 3 business units. Now then secondly, where do we want to play? Obviously, we play in our current business. And obviously, in that current business, we want to be extremely competitive. And there, we talk about market share. But if you only grow while growing market share, you will not future-proof your company. So yes, we want to grow our market share, but it's coupled with what we call blue ocean. I don't know if you read that beautiful book within 15 years ago, it's about blue and red oceans. The red ocean is you defend your market share in existing markets. Blue Ocean is you develop new markets.

Now new markets, blue oceans are healthy and tasty food, sugar reduction. It's replacing sugar where we're not in with enzymes, with ingredients, which create the sense of sweetness. That is new business. HMOs in the Health Nutrition & Care part. That is an additional ingredient to the playfield. The early life nutrition market stays the same, but the ingredients in the life nutrition is growing. That is blue ocean, it's not market share gain, it is additional business. Now -- and then preventative health care, Iris mentioned HMOs. With the aging population today, health care cannot be financed as such. So there will be a disruption or an evolution, but there will be a change for people taking care more and more about preventative measures for their health because you can no longer afford not to do it. And thirdly, it's about well-being, well-being and beyond, how you feel, how you look for your identity and there also fragrances play a key role, not only in generation, which is normally traditionally using, but also the younger generation itself. So we are next to having innovation platforms. We also build our company to grow in the blue oceans, new areas to grow with. And that is super important because that's the key how we can differentiate ourselves.

Now having said that, with that business model, with the company we've created, that EUR 9 billion company with a good portfolio, we do operate in a crazy world. And there are a few challenges we need to share. And I think there are also a few themes you wanted us to talk about. So we did listen to you to say, hey, what are the themes you want us to dive into a little bit, not only me and Ralf but also the BU president. So let me first start with the major headwinds. So Avi, and this is the dollar for us as well as the Swiss franc. That has had a negative impact of EUR 100 million in '24 and '25 quite considerably. That will still have a negative impact in 2026 of about EUR 70 million current rates, FX impact for 2026. So now the dollar, if you take a 10 years time frame, it goes up and down. Today, we never know where it's going to end. On the Swiss franc, obviously, we do see also there quite some ups and downs, but in less frequent way as we speak. So FX headwinds are still out there, and we can't manage them, but we'll need to be very transparent on what we see today. Now second is that we have seen in the second half a more cautious consumer demand.

Now in a world where uncertainty is higher and higher, consumers basically become cautious. And what they do is you become cautious, you can do 2 things. You either pile stock, what we're seeing with Gavin certainly is happening, I buy a little bit more or you destock. Now that has happened in the second half of last year with a bit more cautious behavior. And we've seen that predominantly a bit ironically in the North American market. So that is an interesting move to see. We Don't see any change from Q3, Q4 going into Q1. But looking at our brief in our pipeline, we do think that the second half, we will see an uptake of that based on the experience we have.

Now there are 4 other elements I want to share with you. I will come back on the China ingredients competition because that is apparently a topic we need to address and artificial intelligence. The other 2 affordability in GLP-1, the BU presence will come back to you on that. So I also ask some questions during the Q&A, they will also address it. But let me remind you of 1 thing. On affordability, down trading, GLP-1. If there is a change in requirements, if there's a new regulatory requirement. If there is a new ingredient, if there's a new product launch, if there's a substitution brief, that means business for us, extra business. So change is our friend to a certain extent within the company we'll just focus what we have. But in the world, change will create new briefs and will create opportunities for us. Now that is valid for affordability and that is valid for the GLP-1. And the GLP-1 ratio will talk about it. That market linked to ingredients we have is growing faster than the average market. So it definitely is an opportunity.

Now then let's focus a little bit on the China ingredients, which is on your mind. So let me start with the fact that we did our tuning of the portfolio. You've seen the 6 box ANH, but also the aroma ingredients and nondifferentiated ones also the nondifferentiated vitamins. They all went with the deal. So the portfolio we have is predominantly a portfolio around specialty where we can differentiate. Secondly, we are not in big molecules. We are not in mental. We're not in all types of huge molecules in itself. We're not in Sitral. We're basically in smaller molecules because that's the business model. Now we have more than 3,000 differentiated ingredients in our toolbox, in our pilot, which we use. Not 1 of them -- there's no 1 molecule, which is more than 50 million. I can tell you, logistically, that's a mass, but it's a beautiful mess because it's very difficult to copy. So we feel that the China ingredients competition has a very limited impact to us because of the business model, but also the ingredient toolbox we have.

Secondly, you need to remind that even if you have the right ingredients, you need to have that creation capability, creativity, perfumers, flavorists, application specialists with a whole ecosystem. You need to have that ecosystem to be competitive to win brief with customers. So that complex ecosystem is also a barrier to do so. But I think the farm is foremost important 1 is we're not in the big molecules. We've done that. We sold it off. And remember, we also were in Terpenes with Pinova, which we didn't rebuild, the synthetic ones. So we feel that, that impact is rather limited.

Now then AI, it's a busy slide, and that's because of it because nobody knows exactly what AI will do to the industry. But we see today positive effects. And what we always see is we look add opportunities from an ingredient discovery. You see that here on the left-hand side, and we use AI there. We use AI for productivity games. I'll come back to that in a minute. And we use AI to accelerate the brief 2 adoption process.

Now let me give you 3 examples of all of 3. So 1 is the ingredient discovery. So within the MR part in the procuring beauty unit, we use for more than 80% the ingredient discovery we use AI. So they pretest, they prescreen and therefore, the -- the acceleration of that whole process has increased considerably. So we use AI as a sort of a filter before we get the human emotional creativity into the game. And that creates quite some efficiency in savings.

Now then the middle block, more the gray brownish area, that is production development, production processes, we have applied, and this is user cases. So we're using it where we feel there is benefits. We used it to optimize an important process in our industry is distillation. We used AI for that to optimize that. And I can tell you that the stability and the yield improvement have been 10% to 30%. And that's a couple of million savings you can generate using AI going forward. We're going to accelerate those user cases as we speak. And then last but not least, the brief to adoption process. Also here, for instance, in TTH, we use AI to prescreen, to leverage and look at formula creation. What are the ingredients you could use. But also simulate what the outcome will be in terms of how successful a formulation could be. And that is reducing the testing costs and also here, an opportunity for a couple of millions.

Now those are user cases. We are super happy with the positive outcome of it, and we're going to roll that further out. We're already working on it for quite some time. But we do now see that it has a huge impact on how we could operate internally. Now there are people in the world that basically say Dimitri, what if in the future, perfumers are no longer needed. Flavors are no longer needed. You have a Charlie of a sea, different share in our China and Research Officer, but Charlie Nesara, who act as a perfumer or flavorist, are you then not out of business. Now first of all, I don't think that AI or Charlie or Sierra will ever have the creativity and emotions which our customers require. Secondly, if you have a perfumer or you have a solution for a fantastic food product, which is just mechanically being made without any emotion. I don't know if there's a huge market for it. So it will help for the perfumers and the flavors and application specialists to be faster to prescreen. But to be fully tapered and to be eradicated by AI I have my doubt. There is a good place to do that. And even for smaller customers, you could do AI generated. We've done that with some of the venturing and some of the experience we had in the past.

Now let's assume just hypothetically, which I don't believe, but hypothetically, that there is an AI perfumer and AI flavor, it's an AI application specialist. Just in that extreme case, you can only load the algorithms with data you own. Now -- and here, our philosophy of having 2 anchors to build our business case, our business model is important because we own the specialty ingredients. We don't buy them from the outside, we partly buy them from the outside. We partly have sourcing joint ventures, but we also have these captive ingredients, the proprietary ingredients, which fill the algorithm. So in the extreme case that there's an artificial prosumer flavors and application specialists, there is 1 company in this space who would benefit from that the most. And that's the 1 who has invested the most in the ingredient pallet, and that's us. We have the biggest, broadest more specialist ingredient pallet compared to all our others in this space. So we are not afraid if that will happen. I don't think it will happen. But if they will be fully AI driven, we are the ones who can load our algorithms, and we will even be best positioned. That on AI, an important topic, I don't have the full wisdom on what it will do, but I just share where we are today and what we feel philosophically about where it could go to. And if it goes to the extreme, from all the companies in the space, we are best positioned.

Then let's move to today's financial. What's the starting point before I give you a little bit of financial trajectory. So this is the starting point for what we have built. So sales, that was about the EUR 9 million I told you about with an average organic sales growth of 4.5% versus the market on average 4%. So slightly above in line with to the peers. Then on the adjusted EBITDA. I think it's important to know that, indeed, we have grown our EBITDA 9.5% CAGR and for 2 years, and we have improved on the quality of our EBITDA margin. Now 14.4 million was the group at that time. If we then take the tuning of the portfolio, including the ANH divestment, you will see a step-up from that portfolio from 14.4% to 18.2%. So it shows the liberate choices we made from the business we basically have divested. Now as of that moment, we have improved on our EBITDA margin with a step-up of 140 basis points from 18.2% to 19.6%. And I know you should not correct for FX, I just do it for a minute. If that will be at the constant currency of 23%, that will be with another step-up of 0.4%. So we will be close to the 20% in itself. Now that is the starting point, so around 20% on EBITDA and the EUR 9 billion of sales. Then the cash conversion, remember in the almost 2 years ago, you were not very impressed about our cash conversion target of above 10%. And Well, we also said let us be a little bit prudent, maybe a little bit conservative. And you show here that we have been a little bit prudent and conservative because we have outperformed at 10%. But we're obviously not happy with that 10%, and we'll come back to that a little bit in updating our midterm targets for the cash conversion that will be more than the 10% as you've seen here. So on average, it is around 11% over the years.

Now that is a starting point. That's the basis we start to grow our business on. What are the elements of growth in our sales, in our EBITDA, in our cash. Now these are the action plans in place. So first of all, we're going to grow the business we have. with focus on the high growth, high margin. What does it mean? So it means for instance, in TTH, will grow in the enzymes and cultures and probiotics for piping Beauty, it means that we want to grow, fine fragrance, for HNG is we're going to grow HMO Nutrition place. Separately, we use the reformulation. So it changes our friend, GLP-1, clean label, new colors, it helps on the brief wall. We will materialize on that and we need our innovation to help us with that. So we feel we have a pathway to accelerate that sales.

Then on the EBITDA margin. Let me make it very clear. We are at around 20%, and we need to be around 22% to 23%. 1% of that will take in our own control. So we have launched an operational excellence project to reduce costs, which will generate around 1% of EBITDA margin. That's around EUR 90 million to EUR 200 million, if you look at that sales. So it's a 1%, which we do on program, on cost control, and we're going to deliver on that, like we've done always on the cost programs. Secondly, we'll use deleverage. So if we grow our top line, we use the leverage to add another 1%. So that means that we move from 20% to 21% to 22% in the accelerated bit.

Now we all know that we have the ANH carve-out that we have server level agreement. We have the special service agreement over 1 to 2 years, which will fade out. And we're going to have programs aligned to that to offset these stranded costs. So the stranded costs will not have an impact. Now Philip Eykerman is here. Many of you know him well. He is fully dedicated to the whole transformation, stranded costs for ANH. We've done that many times before with the pharma divestment with the materials divestment. And we're pretty good at that. it is painful, but we're going to deliver on that program and Philippe is fully dedicated to help us to do that. So on the EBITDA margin, I think we have a clear pathway where we have that under our own control. And then cash conversion. Let me remind you that in the current CapEx as a percentage of sales, there is still 1% to 1.5% on both air. This is the last year in 26. Our plant will be ready end of this year and then start to have commercial volume somewhere in 27 in itself. So that is a 1% to 1.5% which will no longer be there. That's not the underlying part. That was a special project. And then we'll couple that with an inventory reduction program. So we need to be structurally below 27%. We are in the 28, 29 area. So I think we have a step-up to be made, which will help that cash conversion.

Now what does that mean for the outlook 2026? And then I bridge that to the path to the beyond. So in the current context, let me make it very clear that our assumption is that the Middle East situation, the Warner Middle East, doesn't have a prolonged period. Nobody knows. We need to see. But that is not part of the outlook we're giving. Now the outlook is 2% to 4% organic sales growth in the current context with an adjusted EBITA of around 20% and a cash conversion of 11% to 12% somewhere in the middle in the current context. And I think we believe that in today's environment, being a little bit prudent his wisdom. Now that is 26%. If we take that 26 with the growth drivers to see what is it bringing us beyond. We clearly focus on the growth areas of the businesses and the business units will be on stage after me. Let me start with PMB. So we will accelerate growth by using the focus on the regional consumer brands because that's where the real accelerated growth is and on fine fragrance and fine fragrance, coupled with the Middle East. In this case, that was before the Middle East were started, but we all know that there is extra growth -- the accelerated growth in the Middle East for Fine Fragrance, and we're going to target that. We've opened a new lab office in Riyadh, and we have a good position in Dubai, and that will accelerate.

Now remember that also the growth drivers for '26 and beyond, we had a ship due sun filter demand in 2 if that stabilizes and normalizes, that obviously will help in terms of growth. That's the wrong reason to grow, so don't get me wrong. But if you grow because last year was bad, that's not the role we want, but for sun filters, it will help us in 2026 and in 2027. Then on TTH, we're going to capitalize on GLP-1 on healthy and tasty food. We do see functional drinks, and we see the dairy category, the yours and the cheese being seen as a healthy category, and we do see above-average growth in that area, and we'll couple that with the enzyme to culture and probiotics. We have very good strong position. For instance, in enzymes, we are the #1 player in the dairy segment. We should be #1 in many other segments as well, Mauricio, but we already are in the dairy. And we're benefiting from that whole healthy setup. And we'll focus on India, on Africa and on Asia. And on AMC, we will have new product launches in a category which is growing very fast. It's women's health, in a previously male-dominated world, we were all launching male health parts, but the women health is a different story. We're going to categorize that. It's a fast-growing area, certainly also North America and iHealth will materialize on that. Obviously, HMOs, we already talked about it. That is -- we are the leader in the HMO space, we are the leader in large nutrition. So having coupled that ingredients with creation is a very strong treat. And then North America will basically stabilize over 2026. That is, if that will happen, obviously, it will help ANC because that was with a 40% exposure of agent in North America, a stabilization and maybe later on a normalization will absolutely help their growth.

So those are the growth drivers are in place. So we're going to grow on all of our portfolios. So don't get me wrong, the EUR 9 billion, we're happy what we have. But we're going to make a few pinpoints where we outgrow that average growth. And we have them in place for the business units and there are only 2, 3 per business unit. If we do that, we can come to that accelerated growth. And therefore, we feel comfortable that we can make that movement from 2 to 4 as our outlook, into 4 to 6 for 2027. And it's based on what I just said, grow what we have. So the different topic areas, focused areas for the growth of the business units coupled with a little bit of market normalization. We're expecting a little bit of market normalization. And I think all companies in our space basically expect a bit of market normalization. Don't ask me when, but if it normalizes, that will help us from 26% to 27% between 1% to 2%. It depends a little bit on how 26 lands. And then bringing it to 2028, but let me make it very clear. Our focus for the next 2 years is on 26 and 27. We grow what we have. We accelerate performance for 26 and 27. But to give you a bridge to 28 because that was also 1 of the questions we got is, hey, how do you build that to your midterm targets? We feel very strongly that if you have 46% as the underlying growth with a bit of normalization and grow what we have, and by the way, we have grown 4.5% in '24 and '25. So it's absolutely doable. Then Bower will sink in, in '28. So Bover will be -- the plant will be ready end of 26, we'll start up commercial volumes in 27, and we'll see significant impact in '28 and beyond. And the 5.7 million, and we always said that there was a 1% board. So I split it into 4 to 6 as the underlying business growth, plus the 1% related to Bover. So we really see a clear path to that growth momentum, which we have depicted.

Then on the EBITDA margin, I think we are around 20%. We will bring the cost program in place that will deliver the 21%. That will happen a little bit in '26, but predominantly in maybe a little bit in 28. So that all the 1%, which we have under our own control. Then with the leverage of the top line that will bring another 1% and that we are in the range of 22 to 23. But also here, a clear focus on delivering 26 and 27. Nice to dream about 28. We're going to deliver focus and accelerate on 26 and 27.

Then on the cash conversion, now you see it already here, our cash conversion target and commitment for '28 and beyond is 14%, 14% or higher to be precise. How precise can you be in 2028, but it will be 14% or higher coming from around an 11%. Now 1 to 1.5 on Boer brings you at 12.5%. Now then with a 1% EBITDA margin increase, you're in at 13.5%, with a little bit of working capital, which we have put in we are feeling very comfortable that we can generate a company that generates 14% or higher. So having said that, I think the key element of making our company tick is that it starts with growth. Grow what we have. And I've indicated a little bit what are the key pockets that we can outperform with growing the high-growth, high-margin area. I clearly indicated that the transformation is done. You will not see that journey slide from me anymore, anytime. Because now it's time to focus, it's time to execute and time to accelerate. And we're going to do that by focusing on growing what we have. but also by incurring what we do. So no big new projects within these infinities the program we're going to run is the cost efficiency program. It's the cost optimization program. It's operational excellence, is optimizing what you have. That is anchor what we do. And by doing so, focusing on the growth with optimizing what we do. We're going to deliver on our promises. Within the pathway we've set with an outlook on 26 with a bridge from with a pathway clearly on 28. Having said that, 26 and 27 is a clear focus for us to deliver, not only me, not only the BU presidents, but all 21,000 people within these in [indiscernible]. Thank you.

[Presentation]

Good morning. So I must admit, I feel quite proud and excited to be standing here in front of you. And this for various reasons. The first reason is that I actually joined the company, DSM-Firmenich end of last year. was the handover and over PO with Philip. And I took over the role as of January 1. And the first reason is looking at where DSM-Firmenich and actually Health, Nutrition & Care, which I will refer to as HMC in the presentation, sit exactly at the intersection of what I've been doing in the past 25 years. On 1 hand, spent close to 20 years in the consumer industry, B2C at a global level. And when I say global, for those who don't know me, I'm actually Swiss originally, but I've spent most of my time, most of my life since Childhood outside Switzerland. In countries like Colombia, like Nigeria, like the U.S. where I studied, then I joined Nestle and I had the chance and the privilege to live in emerging countries like Venezuela, like Mexico, then in China, where my daughters are born than in Singapore, taking care of APAC and then only back to Switzerland when I actually left Nestle 20 years after joining the other part, which is the B2B part not in the industry, not in manufacturing, in service industry, in medical diagnostics. So still very much linked to the health sector. And if I look at DSM-Firmenich and HNC, they sit exactly at the intersection of these 2 worlds. They bring those 2 worlds together. So that brings me a lot of pride and excitement. And lastly, because HNC has a very important role to play within the journey of DSM-Firmenich on health, nutrition and beauty.

Now let's step back a bit. If we think about some of the long-term trends that are impacting positively and that represents an opportunity for our category is through simple questions. Who in this room doesn't want to live longer? And the second question is, who does not want to live longer and better, healthier, not only inside this room, but outside as well. And that creates the first opportunity, which is called -- you probably heard about the 10 years gap between the life span and the health plan. How many years people actually live versus how many years people actually leave better and not only longer, that's the first opportunity.

The second opportunity is in order to live better, you need to create daily habits around exercise, around nutrition, and to create those daily habits in nutrition, we all have probably, and we will share an example here, aging relatives or aging parents, how hard it is to have to stick to this daily nutrition on macro and micronutrients, taste and experience matter a lot, and that's the second opportunity where DSM Feminine bring those 2 worlds together. So the next 20 minutes, we're organizing around 3 elements: first, who we are as any, give you a bit of facts, where we come from. Number two, what makes us unique in the marketplace; and number three, where will the growth come in '26 and then to reach our midterm targets.

So on the first point, who we are. I will not cover all the numbers, but a few elements are interesting. First of all, it's a people business. You build trust. You will trust with your customers, you build trust with your consumers. The key number here is 3,600 health and nutritional professionals are dedicated to provide a better life to thousands, hundreds of thousands of people around the planet.

Number two, if you look at our business line and segment spreads, it's quite interesting because you see different segment, different businesses. And you will see throughout the presentation that those segments and businesses are very much connected, even though they are addressing different consumer segments into a very powerful story. Number two, someone before the event was asking me, Alex, how much of your portfolio is actually discretionary versus nondiscretionary. You see some very interesting segments here. We talk about biomedical, pharma, medical nutrition, early life nutrition. These are nondiscretionary. You could argue around dietary supplement, but we're well positioned. Second element, customer mix also well balanced because if you look at early life nutrition, medical nutrition, it's actually very much concentrated into a few players that represent 2/3, close to 70% of the category that are driving the growth and the innovation. If you go to dietary supplements or even pharma, the mix is actually opposite. So we're very well diversified. On the geographies, yes, North America represents 40%, but 40% across 3 businesses: iHealth, a B2C business, biomedical B2B and the rest of the consumer ingredient business that we have. Now the interesting part or the other interesting part is the regions that are fast growing are China, APAC and EMEA, across different segments. So this is also balancing itself and giving us a lot of confidence to meet our midterm targets. So that's who we are in a nutshell.

Now where do we come from? And you heard before Dimitri speaking about tuning the portfolio around divesting. These are decisions that were made that were implemented already that give us a great foundation to accelerate from nondifferentiated vitamins, Marin lips are exited. At the same time, the integration has been already implemented across the 3 divisions, we have the blend of the legacy and the power of DSM and Firmenich, bringing all together. And we're scaling up.

Now algae lipids, we're #1 in that segment around the world. And we're scaling up the solution selling model, Vitamin represents less than 1/4 of our portfolio today. It represented much more only a few months ago. So we are accelerating that part. Now if you look at the numbers on the right side, what is interesting is, yes, of course, you look at 1%. We're not happy with 1%. Now there's 2 elements with 1% CAGR, you are able still to generate a quite significant step up in EBITDA. That's the first thing to notice. So the mix is really moving into the right direction. Second, if you double click on the 1%, we have a few elements here. First of all, 24% versus 23% growth was quite significant all the way to mid last year, and it is fair to say that the second half of last year was disappointing, based on 3 elements that we can cover later. And we are seeing in quarter 1, it will take a bit of time, quarter 1, quarter 2, and then we'll be back on growth. So it's important not to take the 1% just as a one-off. There is a different reality in this, but the trend is positive, and I feel very confident not only on the year, but also on the midterm target. So that's -- we cover the who we are. We cover the where we are from.

Now what makes us unique. And what is very interesting is the way we look at our segments are connected. Connected through what I explained earlier, we're talking about health span, an enjoyable health span, creating opportunity of prevention, but prevention is not only happening when you start taking dietary supplement around midlife. That helps, but it starts way earlier. It starts actually even before birth. All my experience in the infant nutrition category talks about the first 1,000 days of life having such an important impact on the rest of your life. So it starts with the early life. It starts with the beginning of life. It continues, obviously, with the prime of life. Interesting data here, people do start taking dietary supplement earlier on in Asia typically around 35 years of age in the rest of the world, around 45%. Those are important. And every time people are taking them earlier. And then, of course, the advanced years are very critical, categories like medical nutrition, you see a decline around the aging parents that we spoke about. We can help to give still a very interesting health spend and enjoyable health spend for our parents and our aging parents. So that's a continuum. Prevention has to be taken care of at every single stage. And we're the only 1 that can do that.

Now obviously, we're going to be extremely focused razor-sharp focused because those stages are obviously, you can say they're pretty broad. What are the choices we're making. Where are we actually playing on the beginning of life, premium ingredients. The demographics around beginning of life, you look at the birth rates in China, I spent 5 years in China, actually contributed to the birth rate. My daughters are born there. When I was there in 2011, it was around 60 million births per year. Now it's down to 8 million, 9 million. I was like, wow, the volume is really declining. Well, guess what, the value of that market has not declined, has actually increased. The markets are premiumizing, and we're shaping that. We're shaping that through premium ingredients, HMO, human milk oligosaccharides. What parents are looking for is the best nutrition and the best nutrition is in the breast milk. And we need to support those models that cannot breast feed or that still want to complement the food of their children with the best possible nutrition. We're going to double-click on that. In the growth space in the prime of life, choices on healthy longevity with what I just talked about. Dietary supplement is a wide category. We're going to make those choices. And specifically on regions where we see the penetration opportunity. And then on the advanced years, aging-related decline, GLP-1, the importance of consumption adherence that means sticking to a daily regional habits. So that gives you, of course, an opportunity and an opportunity of EUR 25 billion addressable market.

Now what is interesting about that is that you see all those growth areas, actually we can scale it. And that's going to be my next slide. We can scale it because we have developed an end-to-end innovation engine, 1 single 1. that supports all our customers into this. The second element of scale is that we don't do that alone. We do that with our customers. And we do that with our customers in a way that we stop being player. We become a B4B4C player. And what changes here is a few things. First, you see the sea appearing. I spent 20 years understanding the see the consumer because you cannot support, you cannot co-create, you cannot provide solutions to your customers if you don't understand their own end customer. That's our job to support them. So let's start with that. Every example I will give you start with the understanding of the consumer because then we sit down at the table with our customers and we co-shape the pipeline with them, not just 1 launch a full pipeline. And I've experienced that with them already. I met more than 30 customers since I joined from the local one, the regional one, the global ones. Not everyone has R&D muscles. I'm going to share with you an example of end-to-end innovation that we provide to our customers with their brands, but we do everything. That's what we call market-ready solutions. It's turnkey innovation.

So how does that look like? Well, it's actually -- it's simple to understand, but it's pretty unique. It's pretty unique because on the left side, you have our [ Ferro ] ingredients toolbox with our own science behind it, our own Ingredient brands behind it, Algal lipids with life's OMEGA, Glycare and HMO with multiple HMOs not only launched already as we speak, but in the pipeline to come in China and in the rest of the world. Vitamin forms, the one that are differentiated are with us. Biotics with Uumium, in particular, postbiotics, very differentiated to probiotics because you can apply them in different shape and forms like gummies.

You cannot do that with probiotics. Flavors and maskers, obviously, that's what I mentioned at the beginning. You bring the 2 worlds together, the strength of DSM and Firmenich together. And then you have the creation and application, as we spoke about, receptor sensory science, performance blends for those customers that have factories, the big large players that say, look, you give us the blends with your hero ingredients, but we take care of the final manufacturing, no problem at all or the market-ready solutions well, look, we have no R&D, we have no factories. Just give us -- we give you the label, the brand and you give us the product.

We can do both. Specialty biomaterials, which is more for biomedical, and then obviously, the customer centricity across the different regions, across the different segments. Here, what is critical is protecting the brand reputation of our customers.

Quality and safety, and I'm not saying something that is irrelevant for what we've seen in the last weeks. How important is quality and safety? How important is innovation for our customers to differentiate themselves in the marketplace, whether they are large, medium, regional, local. This is the model.

And what is even more excited, and we spoke about AI before, is that we're already more than experimenting, we are developing a model that will help us formulating through AI that increases your speed to market or actually reduces your speed to market, but also generating new customer and consumer insights through AI that allows us to understand in a very personalized way what our customers are wanting, anticipate that and propose them already solutions to where their brand is positioned, thanks to our innovation engine.

So in a nutshell, this is not an invention model. It's not a simple model to innovate. It's a model to industrialize with scale, differentiated innovation for our customers. We stop being an ingredient supplier. We become a system player. and that is rare and that is quite unique.

I spent a bit of time in some of the trade shows and some of the big trade shows, global trade shows, I can tell you there's not a lot of companies that offer that. Now let me give you some examples how that comes to life, not only comforting our midterm ambition, but already starting in '26. We start obviously with the start, Early Life Nutrition, the beginning of life. There are probably parents around the room. And when you're a parent, I am one, while you look at quality and safety, it's not anymore a hygiene factor.

It's a decision criteria. You don't joke with that. You know exactly what I'm referring to. Number two, you want innovation. How do you drive premiumization by understanding the natural human nutrients that are in breast milk. HMO is one of the major one, but there are more. We have more in the pipeline. We're putting a lot of R&D behind understanding breast milk and using our biotech technologies and capabilities to scale it up.

Number three, we don't stay there. The new application, new consumption opportunities like supplements. I was in China end of last year. I didn't go there in 10 years. I saw a category of kids supplements, so kids above 3 years that is growing very fast, gummies, different applications that are actually very convenient for children. These categories are growing.

Maternal nutrition. When a mother wants to -- well, is already pregnant, she needs to have the right nutrients for her baby. We're providing those supplements. This category is also growing very fast. And obviously, you have the HMO that I put as an example, HMOs is going to be in most infant formula in the future. The good news is that it's today in less than 20% of all worldwide infant formula, less than 20%.

We're shaping that category. We're driving this category growth. It will not -- might not be at 100%, but it will get close to 70%, 80%. There is growth to come in the next years. We are present not only in China. Of course, everyone talks about China, where we're present and registered in more than 100 countries worldwide. So there will growth going to come from HMOs. ARA, you know what I'm referring to, there is demand there. We're scaling up our production as we speak. So in quarter 1, we will not see much effect. We'll start seeing it as of quarter 2 moving forward.

Customers are knocking at the door. I can tell you that. Another example, again, starting with consumer. We spoke about it, healthy longevity. We're making sharp choices. And here, it's very interesting because once you start making those choices, once you understand what is critical to healthy longevity as in cellular health, for example, and then you start understanding what will make the difference here.

And here, what you see on the right part of the screen is actually a concrete example, and you will get some samples when you leave the room is a combination of our life's Omega with our. So 2 of the -- remember on the left part of the engine, the innovation engine, they were on the hero ingredients. You start blending that with our application and creation model because what you need to know is behind Omega, there is an after taste. That's where our Taste technology, our maskers technology comes in. That provides a very actually interesting taste or neutral taste, masking what's not right.

But what's even more exciting is our science showing that if you take that product for 3 years in a row, the science shows that you're reducing your biological age by 3 months, obviously, with a bit of exercise. So this is the product. These are samples that we're showing to our customers as we speak.

They use it as such, they can claim it. And this is a real-life example of what we launched in Japan a couple of weeks ago. It's a brand -- it's a leading yoga brand in Japan. They don't know how to do supplements. They don't have any R&D on that. They don't have plans. But they are positioning themselves as well-being, leading very famous brand, and they knocked at our door.

And we provide them end-to-end the product. The only thing they have to bring us is the label and their brands. We take care of the rest. So these are concrete examples on how we're working and co-creating with our customers depending on the size. Another example is the one I already mentioned. I have an aging mother. She's exactly going through that. I see age decline, less mobility, muscle mass is reducing.

I bought some samples or some real products of medical nutrition where I know that the science is there. And at the beginning, I came back and I saw a couple of samples used, but she basically didn't take it. And why didn't you take it? It tastes horrible. This is where the opportunity is. We're here to solve that issue.

The science is solid, but if we don't solve the taste, they will not take it. And if you're a cancer patient, you have that metallic taste in your mouth. We're able to mask that as well. So we're not here to sell more. We're here to solve more of that issue.

And thanks to our unique capabilities, we're able to do that. Another example, eye health position in North America mainly. In the B2C segment, we have strong brands like AzO, like Culturelle, like Estroven. And here, the opportunity is to double down on the online sales channel.

And we're going to do 3 things here, what we are doing already, rejuvenate the brands. We are increasing massively our investments in media, and we start seeing some results. And innovation on 2 specific areas: women's health, which is growing fast and microbiome or gut health. So Azo specifically on women health and Culturelle on the microbiome gut health. Estroven is more on the menopause, which is also a very interesting segment. So we're making those choices, focusing on -- well, you know the online sales channel in the U.S., no need to mention them.

So we're partnering with them to make sure that we drive and shape those categories. Online, obviously, we have strongholds in the brick-and-mortar channel, and we make sure that we obviously defend and protect those channels as we grow the online. So very exciting stuff happening on that end.

And then last example I will give you before concluding is on biomedical, very interesting segment that even though it's not about nutrition, doesn't matter. We're talking about prevention and preventative health. We're talking about enjoyable health span. And what's very exciting here is if you look at the innovation around biomedical, it's all linked to enjoyable health span. We are moving into prevention monitoring fields, drug delivery, metabolic disease, take diabetes monitoring, use our technology. And if you're the dad, and we have some in our teams, dad and your daughter is -- has diabetes at 3 years old, you want to make sure that the technology is safe and secure, and they're using our technology for that.

Super exciting field, high growth, high margin, super high barriers to entry. So most of our revenues today come from North America. We are expanding in the next 18 to 24 months in 2 additional countries called China and India.

So everything I shared with you so far will help us not only in the midterm, but also starting in '26. And these are some of the products, region and new segments. I mean, we've covered them all, but I'll go through quickly. Product leading the portfolio premiumization with ACMOs and micro algal lipid platforms; number two, strengthen our market leadership with our superior quality, ARA, accelerate creation and application engine in dietary supplements and medical nutrition. I shared with you some very concrete examples.

Then when it comes to region, we see a big opportunity, namely in China, EMEA and APAC. And by the way, we have our -- what is Cristina? Can you stand up, Christina, so people see you? So if you're interested in understanding more what we do in EMEA, I mean, first of all, Christina and her team are doing a great job. We are shaping the categories in dietary supplements.

We're growing faster than the category, and there's great stuff happening there. So if you want to engage with her over coffee, feel free to do so. And obviously, the North America, it's still 40%. Let's be realistic. So of course, when North America consumer confidence is not super high there, we need to mitigate it with the rest. But if this starts normalizing, we will accelerate that even further.

And finally, end new segment, we spoke about eye health. We spoke about medical nutrition, a little bit less about pharma. There's also very exciting stuff happening. Maskers technology is critical in pharma because you have bitterness in many of the APIs and our technology are enabling that masking.

So if you want to hear more for that, you can also talk to us at the coffee break. Last slide, if we sum it up, so we spoke about who we are, where we come from, the decisions that were made that build the foundation and the base for the future. We spoke about what makes us unique. with a unique life-stage approach on prevention, the unique end-to-end innovation scalable model and then concrete example of what we're doing already now in '26 and that will help us with the midterm, I personally feel very confident with the organic sales growth of 4% to 6%.

Why a range? Well, you can imagine with what's happening around the world, we also need to be realistic, and you've heard it from Dimitri earlier. And I feel very confident that we're going to cross the bar of 20% EBITDA this year already and 21% to 23% as a range for the midterm. Thank you very much.

Okay. So we're a Swiss-based company, so we will stick to the clock. That means that we have one key question for Alex, and then he will obviously be on the stage at the end of all presentations. So who want to take care of that? One key question for HNC, which is burning. Yes. Maybe just introduce yourself shortly and then...

Agne from Impax Asset Management. Quite clearly, a lot of thought has gone into your capabilities, making sure that you have a right to win in those capabilities. How much thought has gone into aligning yourselves with the right customers? You mentioned the yoga brand that's doing supplements now. Why does the yoga brand have a right to win in supplements? And I guess that's just one example, but maybe you can talk about more.

So thanks for that. So the first element of answer is that depending on the segment where we are. You take early life, you take medical, you might want to start innovating first with the big players to get the scale. So that's where we have pipeline building with the big players that you know of, the 4 or 5 global ones.

On top of that, you go to China, there are strong players that are not only big in China, but that want to internationalize. So you make sure that in terms of range of customers you target in those segments, you go for those ones. To your question on dietary supplement, we start -- I mean, not we start, we see clearly regional and local players having actually bigger growth than some of the global ones.

So it's a different dynamic than Early Life and Medical Nutrition. So we want to make sure we capitalize on those growth. So the mix in dietary supplement is actually close to 80% local versus 20% global. And these brands, they belong there. Some will fail, but it's part of experimenting and give them a chance to succeed with our technology and with our R&D capabilities.

Great. And then, maybe for the overall Health and Nutrition Care, a lot of people think this is all about global play. If you look about local versus global on the portfolio, it's about 60% still localized customers and 40% of the global play. And even some of the global play locally.

So that is also HMC. And I think -- thank you. Thank you so much. Thank you to see you back on stage. So we now go from one beautiful business to another beautiful business, but this beautiful business has beauty in its name. So it's a bit of an unfair competition with Alessandre. So this is obviously the world of Perfumery & Beauty, and let me introduce Emmanuel for you.

[Presentation]

Happy to see you. I love this video, by the way. I think it really well represents who we are. Great to see you today. Last time some of you, we met in Villa Botanica. It was a bit of a different setup because we were on the top of the hill. We have the view of the grass city and also there was a sea view. It's a bit different today, but no, big welcome to all of you.

Very happy to be here. And basically, I think those moments are very important for all of us because it's really a great time to see what has been already executed, what we do, but more important, how P&B is evolving in this moving world. So a big welcome to all of you.

Maybe let me start. I forgot the -- it's over there. So yes, it's better with it. So let me start maybe with who we are. who we are, who is behind P&B and the team of 5,500 people supporting it. A team which is in the business of Fragrance and Ingredients, a leader in the world with EUR 3.8 billion at 22% rounded EBITDA, an incredible machine, an industrial network of more than 30 sites in the world, which are really spread around the different geographies covering Perfumery and Ingredients, which is broad, big with a scale and allows us to get really competitiveness.

A broad portfolio, a very broad portfolio in multiple categories. We serve so many categories in the world, which -- and also many regions in the world, which helps us to, I would say, manage volatility of the business whenever it comes. And last, which is, I think, for me, the most important is really the machine of science, innovation and creation, which is composed of 33 centers in the world to at the end, create the best fragrance.

At the end, really put really creation at the heart of what we do and the best fragrance which consumer loves and also the best fragrance that we will be able to serve in any corners of the world. So this is really who we are and very happy to be the leader of this beautiful P&B business unit.

One of the most popular slide I show to the customer is this one. I think I did maybe hundreds of times over the last 3 years and did it again with Sarah. And in January, we visit -- I think in a week, we visit around 30 to 40 different customers. And each of the time we present that one, our unique ecosystem, an ecosystem which is composed of Perfumery and Ingredients. Perfumery with 3 different channels, very important, where we split consumer fragrance into 2 pieces, means local and regional consumer brands, global consumer brands, but also on the top of that, FFE. This is Perfumery.

Second, the backbone, the heart, the backbone of what is Perfumery and what makes at the end of the day, our Perfumery business successful, it is our Ingredient business unit. And the Ingredient is an undisputed leader in the world and represent 1,700 ingredients that we produce every day in all the different plants around the globe in 10 of active families with a significant high share in that space.

And this is what is the anchor of the success in the Perfumery business. And on the top of that, since the merger in the Ingredients, we had the cosmetic, the Beauty & Care actives on the top to really put, I would say, really a picture, which is a unique ecosystem in the world.

Now on the top of the unique ecosystem, what is fundamental is innovation. Innovation is everywhere, EUR 700 million spend every year. But innovation connected with creation and creation is really the key of what made the success of P&B. And creation -- when you speak about creation, it's about 120 perfumers. And the perfumers have really a center role in what we do.

This is really something where we take care of. And by the way, since the merger, very happy to see that we reinforce even our creation capabilities. And when I see the dynamic, the passion of what our perfumers is doing is great, and they are the key points of the wins. And we will come a bit later in the winning space.

Now having a fundamental creation, a powerful creation is great. What is also fundamental is this intimacy with the customers. We are not a suppliers of fragrance. We are the one to help to co-build the brands. We are connected with them much more than with Ingredient when with perfumers, but we provide consumer insight.

We share the vision, what's the trend of the different market, and we contribute to the success of the brand. So that's why this customer intimacy, our inspiration is really the customers and the consumers. And we are really much having a team which smell the customers who understand the consumer every day and which makes at the end of the day a great success.

So this is what the ecosystem is about. Now having an ecosystem with creation of the heart and with our inspiration is not enough. I think what do we do with that? What do we move from an ecosystem to, I would say, deliver our financial targets. So for that, we create a vision beyond well-being, uniting, delight and care. Please remember that very well, which, I would say, combine the essentials, those 11 moment of care like in hygiene, the desirable where we bring product superiority, new effective territories which all the consumer will enjoy, but also the sustainable very much recognized because over the last 3 months, I think we received 2 very important awards, which is AA CDP and EcoVadis Platinum, which really position sustainability also as a big part of the vision of P&B.

Now if you look backwards since 2021, we all recognize that after COVID, fragrance took a very different position in our life. It's incredible, by the way, what happened because somehow maybe people during the COVID lost the smell, the smell, the nose and maybe they realize that losing the smell, the fragrance has a very different role in their life. And in fact, the way I could see it today is, in fact, maybe in the past, we had fragrance for. You wanted to show how good smell was your fragrance and show it to your neighbor to a fragrance for yourself to feel good.

And at the end of the day, being somehow an expression of yourself. Also, beyond all fashion, Fragrance is also the symbol of wellness, well-being, simply feel good, reduce your stress. And just simply at the end of the day, as it was said in the movie, feel great. So that's why we are very, very happy to be in this Fragrance business because we know that it's underlined by very, very big fundamental.

And by the way, Fragrance is everywhere. And you saw that over the last years. We're very happy to see the Gen Z completely crazy about having not only 1, not only 2, maybe 5, 6, 7 different fragrance for themselves. By the way, it's followed very much by Gen Alpha. I think it's very encouraging that the Gen Alpha also will continue to do it.

We are social media where TikTok has a big, big role in the selection of the fragrance moving forward. The online shopping, incredible what happened on online shopping. So the Fragrance was usually on retail. And in fact, we can see that how much the online shopping has grown the potential of the Fragrance and the reach to everyone in the world. So it's incredible what happened with the Fragrance over the last year, and I'm very happy to do that.

It's some kind of a bit of a revolution that in which we are, and let's see how this will continue moving forward. Now having a vision is great, having an ecosystem is great. So what do we do with it? So we define a strategy with very clear priorities: accelerate, accelerate on regional consumer brands, accelerate on fun fragrance, accelerate on skin care.

Then second, strengthening our position in global consumer brands. We have historical very big position with the global consumer brands. I'm very happy to share with you that in 2026, starting 2026, we are back to be the leader, the #1 in the world in the global consumer brands. Last, which is also fundamental with regard to the backbone, upgrade, upgrade continuously our Ingredient portfolio to make sure that at the end, we will have the biggest and the most possible specialty portfolio of Ingredients in our space.

All of that clear priority under a road map, an execution run map. Emmanuel Thomas is in the room here. He is the one leading that. There is 150 people today, taking the priorities, having a plan for the next 3 years to come, 21 program that we are deploying to be able to implement our strategy and make sure that we have the best possible execution.

Since our last meeting where some of you were with us, a lot of happened. A lot have happened and let me shout out on the team, the team of the 5,500 people, which, in fact, made a tremendous work over the last months to build the ecosystem, start deploying the road map and make a fantastic job and so much committed to it, a big support to all of them. I wanted to recognize that.

Now many, many milestones have been reached. First, on the portfolio. We divested EUR 250 million of commodity ingredients. And in fact, we did it immediately after the merger and very happy to do so in order to make sure that, in fact, our Ingredient business will focus on specialty.

Second, we executed a massive organizational change. within P&B. What you should know is that for 10 years, in fact, we put together Fragrance, Ingredients, supply chain and Beauty & Care under the same roof, which, by the way, was never done before. More than 10 years ago, it was a model from the past. And in fact, we put it together to make sure that we are very much focused to bring clarity, better execution, accountability, but more important, create this organization to, in fact, deliver those channels and make sure that we are the most efficient possible in fine fragrance in the global consumer brand, but also with the regional consumer brand. And this is what has been done. It's a really strong foundation for growth.

Now we took also advantage of this change to make sure that we also put all past acquisitions like Agilex, like DRT, et cetera, et cetera, under the same model, under the same ERP. It was representing around 15% of our total revenue. Now it's done. That's why I was saying we turn a corner somehow because, in fact, we will start 2026 with this one being executed.

And last, we invested, and we invested a lot. So we invested in innovation, and you will see later what it means, but we invested in capabilities, in offices, in creation centers just to make sure that, in fact, we align the strategy with the investment that we are doing. And I don't also forget for Amyris, we invested also in capacity.

With all of this -- with all of this transformation, we also perform. We delivered a solid performance, 5% organic sales growth over the last 2 years, high mid-single digit in Perfumery and low mid-single digit in Ingredients with a step-up of profitability from 20%, which was in H1 -- in H2 2023 when we start being together to 2022 over the last 2 years.

I think what I would like to say is, in fact, I'm very, very happy with what we have done because, in fact, despite the 2025 where we have tariffs, where we have headwinds in the sunfilter business. In fact, the team became -- continue to be resilient, agile in order to be able to transform and perform at the same time.

Now I would say what matters today is 2026. And basically, we really turned a corner in 2025 with one is the most satisfying thing that I saw in 2025 was really our wins. We are a stellar year in terms of wins. So first of all, we had an incredible momentum on the wins with regards to the new adoption. So we won a lot.

And by the way, 2025, we won with an index of 115. That's the growth index or the win index that we have, which is 115, means that we won 15% more than prior. It's also -- this 2025 was also the consequence of win more before. So in fact, since the merger, we significantly increased our wins in that space.

Second, we increased partnership with our customers, in particular, focused on regional customers, regional and locals with what we call core list. So for those ones who know the industry, the core list is very important. And in fact, as we speak, as of today, very happy to see that, in fact, we delivered 90% of what we were targeting at the end of '26.

2025 was a stellar year in winning in Fine Fragrance. In Fine Fragrance, you have several segments. You have the prestige segment. And in fact, John in the room and don't hesitate to communicate with him just after. We doubled the wins for the large project in 2025 from 15 to 27. So it was an incredible stellar year. And in fact, behind those 27, you have incredible big brands, the most iconic brand in the world.

So very, very happy to have seen that. And this, as you know, this win in 2025 are launched from 12 to 18 months later. So it will feed 2026 and beyond. And in fact, what I wanted to do today is to really see what is a win, what is the launch because once you have a win, then you have a launch. And we wanted to move, I would say, to, in fact, many success launch of those products, which were win in '24 that has been launched in 2025.

So let me start first with this fantastic [indiscernible], this [indiscernible] note, which had been created by Marie Salamagne. Marie, thank you very much and Bruno, but also Nicola Bonneville, who really create a gem, who create for me a blockbuster and had been considered by the company we launched it as the best ever launch in the history.

So this is really -- you saw that everywhere in the world, but I'm telling you it's a fantastic note and don't hesitate to test it just after when we will move the room. Then Dolce & Gabbana, Dolce & Gabbana, my devotion. I think Dolce & Gabbana wanted to grow faster, bigger in the U.S. This is a dedicated masculine fragrance for the U.S. It's a fantastic signature. And for those ones who are specialists of Perfumery, Olivier Cresp, our master perfumer, created this incredible clear flower vanilla notes and in fact, made a fantastic fragrance, which was a fantastic success, which will allow, by the way, Dolce & Gabbana to be this quarter in the top 5 of the perfumery house in North America.

The third example, and I wanted to bring 3 different examples is to represent the niche segment in that -- of the Fine Fragrance market. So the, the 2 sisters creating this brand, arriving around 2020 in Dubai, creating a very specific regional brand with a lot of Middle East type of input, but much more than that because it becomes really an incredible brand.

This one, the Vanilla candy rock sugar with a bubble gum signature, okay? So you will see again in the room, you can try it. It's very, very specific and is also making it a great success because basically, it's the #1 on Sephora as we speak in the U.S. And Gabriel, Gabriela and Fabrice made a fantastic perfume. So this is all to show, I would say, the power of creation, the power of our perfumer, the passion behind that, the uniqueness of the creativity, now not only recognized by the customers and the consumers, but also among the peers.

And what you should know is that in 2025, again, I would say, we received 47 awards by 30 different perfumers in the world. So 47 awards in the what we call the 5 awards, whether it is in New York, in Paris, in Berlin, in London, just to show that, in fact, we represent a very, very strong power in the creation of the industry and very happy to do so.

Now I also want to thank all the customers behind that because there's a lot of this intimacy with the customers also thanking them is important to giving us the chance to build the brand together and being successful together. Now let me go back to one point. It's good to have the great ingredients, the backbone of perfumery. It's great to have the perfumer.

But whatever we do, we cannot do anything without also innovation, which is a very important part of the triangle. And in fact, we have very big, I would say, capabilities, science capabilities. 7 different capabilities, which allows us to bring the best innovation in that space. So you may have seen this list already from some of the competitors.

But what I can tell you is that these capabilities are really differentiated like the formulation and material science, like the receptor-based science, like the biotech, et cetera, and makes very be proud about these capabilities led by Sarah in the room. And all of that to enable, I would say, our innovation pipeline. And in Fragrance, we have 3 different categories of innovation.

The first is what we call technologies. And the technologies, the game of -- at the moment of the market of the consumer is a long-lastingness. Long-lastingness, it's about the capsule, so the Popscent Eco, and we launched in 2025, a new generation of Popscent Eco, very successful. So important in China because, in fact, there is regulation in which will impose this. So very key, but also our AlloSense fusion, so which allows from a chemical standpoint to really prolong and amplify the power of our fragrance.

That's about technology. Second, it's about fragrance design, fragrance design where we have our malodor control toolbox with ClearSense, which really makes a real difference, especially in the laundry space. But also we were speaking moving out of action. It's about, I would say, enhancing your emotion.

So that's why we have emotion social connection, which I would say, enhance the well-being at the level of the people. Last, very important, our anchor, our backbone, which is the Ingredient space. So first of all, in the Beauty & Care space, the fantastic Alpaflor Neurosooth, which make a very, very incredible sensation on your skin. So Alpaflor is coming from a flower, which is called -- what's the name of it, Laurent., okay?

So produced in the hubs, where we have extraction technology in Switzerland. and which is enabling us basically to really create a fantastic product, which indeed give a very good sensation of your skin. And last, I wanted to finish because is in the room, and it's important for him. I think the her, the backbone, our ingredient machine. There were 1,700 ingredients, which are there with incredible innovation, and we have this one. This one,, I think, is our last captive launched, I would say, 2 years ago, is the best ever ingredient we ever launched in the history of the family, which has a 100 year of history.

The best ever 10x more, 10x bigger than the second one. And for sure, in some of the wins that we had in fine fragrance, I think has really helped us to be able to be -- to do that, but beyond others also because we have many other very good captive in that space.

So let me now finish, I would say, this presentation on 2026. We saw that we won a lot. So it should feed the growth in 2026. We start the year for sure, with, I would say, a market with limited visibility with somehow unpredictability. Let's see what we saw over the last days out of Middle East.

So for that standpoint, this is the context in which the market is starting. Now on Consumer Fragrance, I think let's split the Fragrance business into the Consumer Fragrance and the Fine Fragrance, which are different dynamic. On Consumer Fragrance, we see a very cautious consumer sentiment. with the FMCG, in fact, in Home and Beauty really show a slowdown from mid-single digit to low single digit. So -- and we also saw in 2025, by the way, a normalization of the market from a very big double-digit growth in 2024 to a mid-single digit in 2025.

The good news is all the customers in Consumer Fragrance want to invest in superiority. So they still consider -- they do consider that Fragrance is a key element of success of their brand in the market. And by the way, there is competition who is superior to which of the others. So despite, I would say, the context, which is not the easiest one, Fragrance is still keeping a central role in that space.

Now we expect the -- I would say, the market to grow at 3% to 4% in 2026, a bit more in H2 than in H1. So that's a bit what we are expecting in that space. Now from the Fine fragrance perspective, there is really 2 different markets, the market of prestige, the market of lifestyle and the niche market, which is one market by itself, which, in fact, delivered a mid-single digit already last year. And basically, we believe that this will continue.

Now the rest of the market, which we'll call, in fact, which really grow very, very fast with double-digit growth. The key question is how, at the end, the Middle East crisis will impact the evolution of that. So from that standpoint, we are a bit more prudent. We still believe that this is a very solid market, a very solid foundation.

All what I said about the role of fragrance in the daily life very well, but also in the Gen Z and the Gen Alpha. So we still see solid, but in fact, let's see what the Middle East could impact that segment. Last, it's about also Ingredients, okay?

We speak about competition on Ingredients. Please have in mind that we are in this business for 100 years. So competition in Ingredients is something we know for many, many years with many, many cycles. So it's not something new. Remember that we divested EUR 250 million of commodities. So this is not anymore in the portfolio.

So we have a very much a specialty portfolio. And also, please have in mind that every year, we also adjust the portfolio. We move from make to buy in order to make sure that we have -- we produce the most possible specialty ingredients in that space. And from that standpoint, you saw that our performance in Ingredients was pretty good compared to peers over the last month.

Now we will see a moderate slowdown moving forward in the next months to come, but we're still very, very positive. We want to keep our market share and get ready when the market will move up. Now we have very clear priority just to finish with you for 2026.

First, keep winning. Second, continue the great momentum in Consumer Fragrance, especially with the regional based on the investment that we have made. Third, on Fine Fragrance, we need to accelerate. So we will accelerate, thanks to the Prestige, all the wins that we had in 2025. But also, we need to expand into new geographies and in particular, in Middle East, in India, in China and Indonesia, where we believe the Masstige market will grow.

Last, on Ingredients, we will have different dynamics. So we will have, I would say, a very good recovery. We will see a good recovery on the Beauty & Care, while, I would say, a moderate slowdown in the context of Ingredients. All of that to deliver 2026. Now this is P&B, a unique ecosystem. A very solid transformation, I believe, that we've made for the last 24 months, a team, a very -- an incredible team.

I was speaking about the perfumers, but a team of people with a lot of passion, a lot of dedication, a team which is there to deliver, believing in the in which we are and focus on execution thanks to the road map that we were speaking about. A great trajectory, by the way, I see to deliver 2026 and also to deliver our midterm targets moving forward. And I would like to close this presentation by saying don't forget beyond well-being, uniting, delight and care. Thank you very much, everyone.

I think, Emmanuel, we need to rehearse that a few times to get that landed. But -- so also here, looking at the Swiss clock in London, maybe one key question. I mean we will be back on stage for all Q&A. So one is the key question you want to ask, Emmanuel, about P&B. What was he so clear? My goodness.

Charles Eden from UBS. Just on the Fine Fragrance, obviously, you've seen strong growth, but it hasn't matched some of the market leaders. Do you think it is a geographic issue? And therefore, you mentioned Middle East, China, India through time. Or is it something else? Just trying to pinpoint because I'm sure obviously, you're happy with the growth, but you also have aspirations to be market leading. So just trying to -- when you've dissected that, what have you attributed the underperformance relative to best-in-class?

I love that question.

Yes. I'm not happy with the Fine Fragrance growth that we have over the last 2 years, okay? Now I really think that 2025 turns the corner in that space because I think we start to win much more, especially in the Prestige segment. We were very strong in the niche and lifestyle also we are growing. So in that space, I think we did a lot in 2025, and you will see this growth coming in 2026.

Now on the masstige side, no doubt that, in fact, we -- we have not been the first one to jump into that market. And there is a reason behind us is because DSM-Firmenich was extremely careful about what we call proximity, the proximity rules of the fragrance.

And we wanted to make sure that before we jump and we invest massively in the Masstige segment, we are clear with our historical customers on the proximity rules, which we did. So 2024, 2025, we clarified the proximity rules with our historical customers. We defined the frame in how we're going to develop in the Masstige segment. So we invested in Dubai. We invested in Riyadh. We have now offices there in Riyadh. We had offices in Dubai for a long time.

So we invest new people, but also beyond Middle East, we need to look at what is happening in China. We invest in China for many years. We have a leading position in China, by the way, in Fine Fragrance. And we will see how we will continue to develop in China, in India and Indonesia. So that will be the 4 key regions where the massive growth will come from. And I really believe that we will grow that space moving forward, thanks to our ingredients and the incredible power of creation.

I like that a lot, and thanks for that question because I think let's make it very clear. We track how we're doing. And you said lacking behind other leaders behind one because if you compare it to the rest, we're clearly on #2. Then your question on local and global. So Emmanuel really on that transformation trajectory is really changing and accelerating the local presence, and we need to do that. So remember, we were 30% local, 70% global. We're now 40% local in Perfumery & Beauty, 60% global. That will continue in terms of the growth and the wins. And like we said, depending a little bit on how Middle East evolves, we are invited to do more.

But within the proximity rules in the company we are today. So I think very well set with, I think, a very strong win pipeline, which creates us confidence for '26, but also thereafter. Now let's close here. I got clear instruction from Dave, you all know as our Head of Investor Relations that you are entitled to a 20-minute break. I don't know, he never does that if we have internal meetings, but fine. I think you are entitled to that. So let's restart at 11:45 also for the members live on the webcast, 11:45 London time, back on stage with taste texture and health. Enjoy the break.

[Break]

Hello, everybody. I hope you feel good. If you don't feel good, you will feel good after this presentation. This is what we talk about, feeling good. That's life, that's food. So I'm the new President of TTH. I'm very happy to be with you today to see the passion you have with food and with our industry.

And I recognize some of the faces during the break. I got a lot of questions. So I will try during my presentation to answer some of those questions already. So to streamline, I'm Italia by origin, but quite Swiss in terms of timing, differently from my colleagues, which are different origin, but not very smart on timing.

So I will be very, very precise. I will move very, very fast. First of all, I will take my control. And maybe who doesn't know me, I mentioned I'm Italian, but I've been living 30 years around the world like Alex, and I'm very passionate about food.

But what I learn across a different world is that food is about passion. It's about local understanding of who we are, and we bring this kind of feeling, this kind of understanding in what we do every day. Just keep this in mind. Our consumer insight is our strength to understand consumers.

Going into the world, you understand how are we different in each part of the world. What is more interesting for you is who TTH is and how we grow up in the last 3 years. There was a lot of anxiety 3 years ago when we did the merger, how these guys will do, putting together 2 different portfolio, 2 different mentality, 2 different focus. Actually, this has been the pleasure of this merger. We are the core of the merger. We really enjoy the journey.

It was not an easy one, but we really love it. And I will explain why and how we made it, okay? Worldwide, I won't go into all the numbers, but what is important for us, what is important is the proximity to our customers. So we are well distributed regionally, a strong presence in U.S., Europe but growing fast in emerging markets.

Other important point is the portfolio. Our portfolio is very balanced. We work across all segments, but we have very relevant presence in the key segments. So beverage, dairy, confectionery, bakery, savory, and others I will explain to you. You will ask me one of the questions already got is, Maurizio, why do you feel so different? I feel different because we are different. What we have done as a business model, we create a kind of a unique value proposition. When you combine ingredient and taste, you do successfully, you basically control the food ecosystem. You can deliver a product understanding how the matrix, the food matrix works from tasting profile, tonality, aroma into the ingredient part of it.

And in the slides, I summarize the 4 core capabilities that we brought together. First is science. From ingredient size, you have the bioscience. You have the biotechnology understanding, the fermentation understanding. From tasting, you have receptor-based technologies. How do you profile the perfect aroma for your customers?

What inspires us and our customers, our capability in creation, application and consumer insight? Without a strong consumer insight, you want to understand consumers. You won't fulfill the need. At the same time, we have a specific team that work on foresight. So we anticipate trends 5, 7 years before they come into the market. That's the specific capabilities we have built in our team. And we use also a lot of AI in doing this.

Third element is our people, passionate people. That's also one key element to why we have been successful in doing this merger. It's about to be passionate in what we do, not owning what we do or fighting to show who is the best among us.

Number four is a balanced presence in all markets, proximity to customers, customers intimacy and at the same time, balance the customer type, global versus regional. And we have 28. We have really deployed a lot of regionalized team to get the proximity to those customers.

When it comes to performance, you say, okay, Maurizio, you tell us what you did well. So can you show what you did well? Okay. That's what I'm going to show what we do well.

First, performance. I think Dimitri explained this. I'm quite particularly proud to show what we have done in the last 3 years during an intense merger. We grew 7% organic growth, our portfolio, combined portfolio. We grew EBITDA by 13%, 183 basis points. And most importantly, we outperformed our competition with a lot of activities running for integration. You can imagine understanding each other, aligning strategies, innovation, et cetera, et cetera.

But then you will say, Maurizio, when you merge, you announced you would deliver synergies? Yes, it's true. We perform and we deliver synergies. We are delivering synergies. I want to give you the sense of how we are delivering synergies. We built over the last 3 years, EUR 450 million, EUR 460 million of pipeline, of which up today, EUR 200 million has been converted in wins. So this is also why -- and Dimitri explained that. This is why we're also growing faster than the other 1 or 2 points because we really transforming this integration is a real advantage to our customers.

Then you say, okay, is this enough? No, it's not enough. Why we have a winning model. We are a winning model because we could in only 3 years, 2.5 years, combine and deliver innovative solution to the market. We have many. I just show here 4 of them. The first one is very close to my heart. Being an Italian, you associate to pizza pasta Mandolino. But what is important, pizza is not just an Italian. If you think about and I've been living in U.S. for 15 years, you have a New York Pizza style, you have Chicago Pizza style, you have Mumbai pizza style now. So pizza has become a global event. And what is the challenge in making pizza? And I do pizza myself, so I know what is the challenge. You need to have an original pizza flavor. You need to have a stretch mozzarella. You need to replicate this every day in the restaurants and at home. And we have all the technologies to bring this in real life every day. This is what we do. I can continue for hours, but because I'm more efficient than my colleagues, I need to stay on the 20 minutes time line, but you can ask all the questions you want.

I want to go more into how we're going to grow the future because we have been successful in the past, doesn't mean automatically we will be successful in the future. But building on what we've been successfully delivered, we are very focused on where customers are going. So our strategy is basically to shift from an integration mode into building the future mode.

And how we're going to do this? First, we are going to focus on a growing strategy. We are building a strong growing strategy. We're not just resting on integration mode. And I will explain what does it mean growing the core and develop new battles. At the same time, we want to simplify what we're doing today. A lot of activities were dedicated to integration, building new system, coordinating new processes and et cetera, et cetera.

What we're going to do? We are going to move all these resources. They have been dedicated for 3 years that we don't need any more in that kind of activities into building the new process, building the new strategies.

Last but not least, we work a lot to combine the 2 teams. And what is the most important thing in a successful team is to think as one single team, and we have been progressing a lot. We want to unleash this with our customers at the moment.

Before I jump on the winning activities or the winning strategy we want to implement, I want to go back to one thing, big challenge of the industry at the moment. I won't talk too much about the megatrends. You all know the megatrends. You all know everybody wants to eat healthy. They want to go into affordable food. They want to go in the light of full food. You all know this.

What is really a challenge today is all of us as consumers, they want a personalized menu. They want a personalized agenda. They want really to enjoy what we do every day. And this brings a lot of differentiation, personalization. What is extremely important in this phase of our industry, understanding all those consumer trends, understand where really people want to go and find the right solution to those consumer needs. That's what we do very well.

And if you think in the morning, you go and have breakfast with your family, with your friends, you open the fridge, is what we call the fridge dilemma. You open the fridge and you find 4 bottles of milk, 1 full fat, 1 skim 1 chocolate, which you recognize immediately because it's brown. But the other 3, you will be struggling to recognize which one is yours. Same when you go din at night, you have the vegan one, your high protein meal is very complex. Now this complexity is we enjoy -- why we enjoy our work. That's what we do the difference in the industry.

Let me spend the next 4, 5 minutes in explaining to you what we are going to do differently or how we're going to increase our offering in the future. In our strategy, what we call our core, so taste, ingredients, palette is what has been successfully delivered to the market, recognized by all customers. And you have seen the financial results. You don't get those financial results if you are not winning in the market, if you are not the preferred customers with preferred supply to your customers.

That's not enough. There are a lot of learnings we have made in the last 3 years in where and how we can boost our core. One area, and Dimitri mentioned it, is around enzymes and cultures. This is a winning palette. Why? Because when you buy your bread in the morning or you eat your yogurt or you buy your cheese, all those ingredients are extremely important to develop the best performance of those products, the best quality and the best tasting profile.

If you -- on top are the capabilities we have in taste and our technologies, you got the best products. So this is the area where we have a high innovative capabilities. We have the scaling capabilities because we have been investing in those technologies. And we also have the customer intimacy and the co-creation ability to deliver those solutions with our customers.

Second is savory. Savory, you would say, Maurizio, this is not new. It is new because savory is evolving every day. What you eat outside, it's most of the time, innovative. And where do we innovate in savory? First, we have been growing and investing a lot in the last 7 years. We have 2 new plants in India, just for you to know. You know how India is fast growing.

The Indonesia was another big investment we have done where we brought savory capabilities. Even in Europe, we are growing capabilities because the demand of consumption in savory has increased a lot. And food service is one of the simple but not only at home, you consume more soups, fats and oil and noodles, et cetera, around the world is the biggest consumption area.

Now what we bring there? We bring a lot of technologies. So we bring asset, we bring capabilities, but we bring what we call receptor-based technology. We understand the tasting profile, the aroma profile. We know how to replicate umami, kokumi, and we know how to reduce salt. Those are the critical capabilities, only few, if not only in this industry. And we are mastering those capabilities in all our recipes.

Beyond the core, we want to expand other segments. And I'll give you the sense of what we want to do. First of all, pet food. We built a solid customer intimacy in pet food through the health portfolio, we have. We are expanding the gut health portfolio with pet, which is very successfully done last year, this year is really fast growing. So we want to expand that one. But also, thanks to our capability in taste, we can expand the palatability offering. So imagine when we go to customers today, we offer a portion of the full product. In a year, 1.5 years from now, we will basically do the full offering in that space across the 3 areas.

Dairy. Dairy, we are probably the biggest player in the world of flavoring ingredient industry. because we sell 1.1 billion in dairy. When you take our portfolio end-to-end from tonality excellence to maskers to enzymes to cultures, et cetera, et cetera, we sell 1.1 billion. We have the full offering in dairy. And guess what? Dairy is the fast-growing segment in the market. Why? Because GLP-1, because everybody want to eat healthy, because it goes from breakfast to dinner, et cetera, et cetera. So it is the segment you want to be in, is the segment where we are the kings, and we have all the solutions.

And we bring more in that space. Sugar reduction, we were the first 15 years ago to enter in this space with innovative solution. And for 15 years, we have been the leading company in this space. Clearly, we want to stay there. We are not going to leave this space. And we have a very relevant pipeline in that space that will come to the market in the next 2 years, maintaining a differentiating value proposition.

Last but not least, probably the most important from now moving forward for consumers. Microbiome, Alex spoke about that. Sarah, if you asked the question, will answer a lot of your questions. Microbiome for food and beverage is a critical inflection point. People want to eat healthy. They want to through the body, assimilate good elements through the body. And microbiome is the key of this dynamic, okay?

We already sell probiotics, postbiotics, but we haven't decoded the entire ecosystem around microbiome through food. And that's what we are going to invest. We invest already a lot. We're going to invest more in the space to bring more and more solution into food that act on the microbiome on the connectivity between microbiome, brain and inflammatory system. So bring energy, bring count and bring digestive immune system opportunities.

Now the question will come as it came from my colleagues, they say, okay, Maurizio, nice story. What's going to happen? How are you going to drive your business in 2026? We have been quite resilient over the past years. We saw '25 and '25 softening. The market was softening. Yes, we're still resilient because we have this balanced portfolio where even if premium products and consumers are affected by this economic -- macroeconomic deviation or inflation, people tend to be cautious. And we see this. We see especially in 2026 Q1, a lowering market kind of trend.

Now we have a very resilient product in our portfolio. And we are very present in markets that are still growing. So you will see, and I mentioned about dairy, energy drinks, nutrition bars, we are in all those products that even if the slowdown will be always consumed by consumers.

At the same time, we are really showing relevant growth in markets like India, double digit, Africa double digit. And we see Asia recovering from last third and fourth quarter. So we are confident that we can play in the range of the 2%, 4% across 2026.

Now as promised, I've been exactly on time, and I will close the presentation with my last minute, giving you 3 takeaways. We have been successful doing the integration. We have been performing the integration. Now we need to shift into building the future, into performing in the future. We still have a little bit of advantage because the synergies, but really, we need to shift because consumers are shifting. We have a unique value proposition in the market. No one has DSM-Firmenich as TTH has this compelling 2 portfolio that bring a unique solution to the market.

Third, we continue to invest in the future, asset, innovation, people capabilities and technologies. That's what we do, and we demonstrated we have done quite well. So you can trust us.

Thanks for listening to me, and I'm opening to Q&A.

So also here, one key question. I think it's clear that Maurizio is respecting time on delivery. And by the way, the same on the promises he made on growth and EBITDA. So I think I hope you get a bit of confidence from his Swiss side. Although I also like the Italian part from that, but that's one key question before we go, and we come back to Q&A a little bit more. So I will make an exception because he was on time we'll do two.

I don't think it's working, right? Also for the webcast is live, I think we can hear you, but the people online.

It's Alex from Barclays. There's a question on Bovaer. Obviously, in the medium-term targets, it's doing quite a lot of the heavy lifting point to group growth and 2 points to the divisional growth. I mean this is a new business for you in Taste, Texture & Health. Could you maybe talk a little bit about how integrated or otherwise Bovaer will be, how it helps with the EUR 1.1 billion dairy portfolio you have and how you can help it with that portfolio? And what visibility you have on that 1% and the build-out to it that's coming in from '28?

Let's do two things. I will respond a little bit on Bovaer and you basically say, why is it adding to your route-to-market part because we made a deliberate choice. Bovaer will be separate. So it will not be fully integrated. But we feel -- I'm going in your way, is that we feel that it's sustainable dairy, which is key, and therefore, it's well fit with TTH. But maybe some customer interaction you can share.

No, you mentioned it. I mean we are very big in dairy. The customers that are going to valorize us, the one valorizing Bovaer, we are all in a sustainable world. We are all pushing for sustainability. This is a valuable product to enhance sustainable solutions. So the connectivity with our customers is straight. Now the adoption and now this is, of course, cascading into farmers, et cetera, as a collateral effect, but the drive-through customers is quite straight.

So if I talk to CEOs of one of our key dairy customers, they always ask myself, ask Bovaer because it's an entry ticket. And then we add the whole TTH business, in many cases, also the HMC business to it. So it's a key lever. Let me just wait for responding on Bovaer because I already a little bit of a comment from our CFO, who wanted to talk about a little bit of Bovaer, not only from a CapEx perspective, but also business because otherwise, we're short in his presentation. I want to respect that as well, Ross. So a second question and then we move on. I think the second question was here.

Actually, it's [indiscernible]. I want to follow up on Bovaer because if you look at your targets, you're quite confident for the 2% to 4% this year, '26. But then '28, it's 4% to 6% with 2% contribution of Bovaer. So actually, that does mean in my view that the rest is not going to accelerate. So how do you feel about that?

I think explained that today, we have around EUR 40 million in Bovaer in sales. So it's not 0, it's EUR 40 million. Clearly, there is a shift in the '26, '27 years where we finalized the plant construction. So the value proposition to the market will be driven by producing it directly. And then '27, '28 is where we're going to have the escalation into the market.

What we clearly wanted to indicate is that the underlying business in TTH should grow 46%. I think we'll all be happy if that will be 46%. We need to move that from 2 to 4. We have the wins here. We have some geographic approaches. As Maurizio explained, the two percentage on top of, by the way, the 2% in TTH is the 1 percent I refer to in the 5 to 7. Remember, so, because on the group, it's about 9 million to 100 million, but let's if it need to be more on Bovaer. We have a slide on both air. We can continue that discussion. I appreciate the question.

So let me thank you for the presentation as an Italian on Swiss time.

Thank you, guys.

Appreciate it So. I showed a little bit the context with the 3 business unit presidents, really catering in for the growth. I hope that you feel that the EBITDA evolution and the cash evolution, it's not in the pocket. I think that's unfair to say, but there's a clear path forward and that the question is, how does that growth element related to? That's why the 3 BU presidents are here. But let's also look at the financial side of it. I said it before. Let's have Ralf dotting the eye and crossing the Ts with all elements going forward. And with that, Ralf, may I ask you on stage.

Well, good afternoon, and thanks for staying today with us and listening to it. Whenever I get to the BU presentations, this is where I get the excitement because in the end, as a financial we can only grow our business if we really grow our top line. And that is an absolute key focus area. We wanted to make sure that each BU was on stage, not only showing where we grow in '26, but also what kind of innovations we have, what markets we're growing in to really underpin our long-term story.

Now Dimitri already said it at the start, it's probably the last time you're going to see that slide, but this was his first and his last slide. And I think it's absolutely important that our transformation is completed. We've done that. We've carved out A&H. We've delivered upon the tuning exercise. All of those transactions are also completed. So the business is no longer involved in that.

And whilst we have also delivered a financial performance in that period. We also recognize that there's a moment to accelerate. And that moment is now. And that's the last slide. So whilst we've created the company that we wanted to create, we will grow that company, and we will step up in performance.

Now before I show you how we're going to do that, and we'll first look a bit back before looking forward, I do want to come back on the A&H transactions. And there were a few points that we need to address because I don't think that is fully understood. And whilst we've had a call around the transaction, at that point, we didn't release our numbers, so it was a bit difficult also to show you Q4 and Q1 trajectory. But at the left side on the slide, you actually see the interim volatility that our A&H business had. It basically started at the time of the merger. The vitamins market were extremely volatile and that basically reduced our performance, and we've seen that come up, but very much also driven by a supply disruption in the industry.

So we clearly articulated the tailwind from that. But after that, you also saw the results come down. And whilst we were very committed to delivering in line with the time line that we communicated early, we wanted to transact over summer 2025. You also see from the slides that results were coming down. That obviously complicates a divestment process. We lost some buyers in the process, but obviously, it put pressure on the overall discussion.

And at that point, Dimitri already explained it, we needed to split the company in 2 because that was the only way to sell it, where we initially started out is that we wanted to do it as a package deal, we had to split the company in a solutions company. growing mid-single digit and at an attractive margin profile and the essential products company, which requires a turnaround. We've done that, but you have to do that. That's why it's also good that this volatility is removed from the quality portfolio that we've built. So that was a clear driver.

We couldn't show you those results for Q4 and the outlook for Q1 at the time when we announced the deal itself, but we wanted to come back on that. The same amount of proceeds of closing, we will collect EUR 1.2 billion, and there were some questions around that. We will collect EUR 600 million in cash that will come our way as EUR 500 million of debt transfers I want to call out there's EUR 300 million related to pension and employee liabilities. So when I show you later on, some of you already probably flipped through in the deck, in the net debt bridge, you don't see the EUR 300 million back in, it's good to take that into account, but it's hard cash that is transferred because that will not translate into a cash out of DSM-Firmenich going forward.

Then last, the EUR 100 million vendor loan is a loan to the solutions company. The company is growing, the companies are generating good profit. And why is that? It's a company that is operating in over 40 countries. Now obviously, it doesn't come with the sophistication of a treasury setup and the like that we've built in the infinite as any other corporate where you leverage cash pools and the like. So we will be bridging that, and we'll collect that money in '27, but that's a loan to the strong part and there's a commitment that, that will be returned.

A second point that you raised that came back and saying, we're not sure around the earn-out. Now let me also come back on that. First of all, the earn-out contains very customary money market multiples. Moreover, it's split in 2 pieces. So there's an element of EUR 300 million that is linked to the overall transaction. However, it's constructed in such a way that with a continuation of the growth that we've seen in the solution company so far, the margin profile in the company so far and in that market exit multiple, we will realize that EUR 300 million on the exit of the solutions company only. So if CVC delivers upon the business case, we will be generating the EUR 300 million earn-out that will come into our direction.

The second part, EUR 200 million is linked to the vitamin company. That requires a bit of normalization in vitamins. It's actually happening today. But with the restoration and we have CVC on board to actually take that part of the business through a transformation. We've done many deals with them. They're excellent in doing that, and they're geared to do that. And that's why we also provide the financing forward. We don't want any distraction discussing with banks, discussing about where we are in terms of the metric, whether or not the next EBITDA turn, et cetera, is achieved, we will provide the funding if necessary because the businesses will be well funded from the start. CVC is putting in about EUR 400 million of equity. And every business will start well funded at the start of their journey. However, we also wanted to make sure that they can execute the transformation of the vitamins, and that's why we provided the loan facility as we communicated in the press release.

Now it comes with a good return. There's an 8% interest on that, but it also ranks senior to any equity proceeds pay out to the shareholders, meaning that the loan will always be returned before there's any money flow towards CVC. So we wanted to make sure that, that is addressed as well.

Then there was a question around the tax outflow and the transaction cost. That's about EUR 200 million. That includes tax. It's split about half-half and that will come as well, and you'll see that later in the bridge. So I think those are the things addressed. So we have a good confidence in collecting the EUR 500 million. You clearly understand where the 1.2 is coming from, but we also benefit from the opportunity with the 20% equity stake that we've got. But it is important that the volatility is out of the group and the downside is protected. whilst at the same time, we secured the profitability for our agency business with a long-term supply agreement.

Now then let's look a bit at the performance of the company that we created. Dimitri already sold a couple of the slides, but we also appreciate that there was a lot to take in. So on the back of the deal on Monday. I think we released the restatement only in the afternoon. And then on Wednesday, Thursday, we presented the complete reset and our hands were tied. And I mean, the minute you actually sign a transaction our friendly auditor also clearly said that you need to report in continuing operations and discontinued and there was limited time. But we also played with the idea of saying, can we issue a restatement before whilst you're in the middle of a transaction and you do have done a few, that's not an option.

So we are bound by time. We had limited flexibility, but we also appreciate that we didn't help you necessarily when we presented our numbers that they landed in a place without a consensus and the like. So we want to provide a bit of insight on that. For that purpose, the deck will have a couple of numbers around 2023. So we restated them for convenience purposes because we only restated '24 and '25 fully as disclosed in the press release, but you'll find a handy in understanding the performance over the last 2 years.

So this is the growth, overall, 4.5% growth, 6% in '24, 3% in '25. Obviously, '25 impacted by a more difficult macro in the second half. If you see very strong growth trajectory for the 6 quarters starting Jan '24, obviously impacted a bit by the macro environment.

But how does that overall look from a business perspective? You've seen the 3 BUs presenting each of themselves, their journey across the board, a 5% organic growth in PNB, a very strong growth in TTH on the back of synergies. On HNC, I want to call that out it's a journey of recovery. We also shared that when we met you guys in '24 at Capital Markets Day, we're saying it's going to take a little longer. We're building a solid foundation. And starting mid-24, the growth was back up mid-single digits. We delivered that in Q3, Q4 '24. We started the year in '25 well. But obviously, with an exposure of 40% to the U.S., if then there is a weakness occurring in the second half, that overall translates into the 1% that we've seen. but the profitability step-up is absolutely there.

Now if we look at the profitability, this is important because it also shows why we've done the exit of Animal Nutrition & Health, why we've tuned our portfolio because the reported figure in 2023 was 14.4% EBITDA margin. If you look at the portfolio that we're now looking at, it's almost a step-up of 4%. It also shows that we took the right measures by taking the businesses out that were a drag on the overall performance and we're hiding the quality of the company that we created. So that's an important step number one.

At the same time, we made a promise that we were going to step up the profitability of all of our businesses. And there, we made first progress. So overall, we stepped up profitability by about 1.4% to 19.6%. Now in the second half, I always like to call it, we were at 20%, highlighting that it's a journey. We're not happy with where we are today. We're happy with progress, but this is not where it's going to stop. We will grow from here. And that 19.6% includes a headwind of around EUR 0.4 billion from FX. So had we been at the same Dimitri said that 20% margin. And why do I call out the FX, it's even more profound in agency, as you'll see on the next page.

So looking at the 3 businesses, overall, a very encouraging step up, 7% step-up in PNB. So you see the leverage also of growth. That's why growth is so important for us. And that's why the BU presentations were really focused on the growth that we see going forward. You also see that accelerator effect that 7% growth that Maurizio talked about earlier in the businesses, translates into a very nice step-up.

On a like-for-like basis, 13% up in the 2 years in the [indiscernible] health. And that is also an accelerator for an improvement in margin. So if you look at the margin of PNB and taste action health, very much at the low end of the guidance that we gave, 22% to 24% for PNB, 21% to 23% for TTH. we're at the verge of getting in there, but we are confident that we will get into that range in the period ahead. very strong pickup in agency as well. You see a strong recovery.

There, we also focus very much around laying a solid foundation, improving our cost base, and that drove an increase in margin to 19.4%. And I made the comment on FX earlier. With the exposure to the U.S., while having a very strong sales presence in the U.S., but at the same time, a cost base in Swissy, the impact in our business was even more profound. It impacted the margin by 1.4%. So I'd imagine that the FX has not moved, we would be having a margin of well above 20% in Agency as well because every time when we were roadshowing are asking us about the confidence to get the margin of agency back up and back into the trajectory of 21% to 23%, we are confident that we will also get there. With the growth back in the areas where we're growing in high-margin markets, we will be back up in the margin also on HNC.

Cash then, average 11%, not really happy about that. Take into account the 1% to 1.5% of Bovaer. It's a costly enterprise. It's a very interesting model. I'll show you in a second. But overall, we're now happy with where we are.

In the earnings call of the full year 2025 results, I indicated that we were sitting about EUR 100 million of inventory navigating through the environment of tariffs and also dealing with a softer environment, but also with the carve-out because we kept a higher level of inventory because we will never have a disappointed customer. I think that has to be priority #1.

Despite the fact that we're focusing on cash, we need to be disciplined on have a disappointed customer. In the soft environment in the second half, we were not able to fully navigate that out of the system. We'll do that in a year ahead, but that's why we also delivered a 10.5% in 2025. We have a solid base to grow from there, and I'll show you a little later on.

Now this slide you've seen before, but it's the foundation on which we will be accelerating our financial performance. So EUR 9 billion, 20%, but also very important at the right side a ROCE that has increased to 11% and a cash conversion of 11% that we're going to build on going forward as we have released our new midterm target to above 14% with an intermediate step in 2027.

Now how are we going to do that? Not well too much on this page because this was the heart of the BU presentation. Great growth trajectory ahead in all of the BUs we're investing in the regional growth in P&B, Middle East, China, India, you've heard that. We're building capacity, but we're also investing in killer ingredients. And you can see the excitement in Emmanuel and the twinkle in his eyes with the launch that we've got because when he speaks about captive, it's about ingredients that we develop and obviously blend into the solutions and the offerings of our customers, but that we don't sell on the market. And that is important because that's the differentiating element.

So we're investing in that. Taste, Texture & Health, enzymes cultures, high-growth margins, high-growth businesses and high margins. I'm always combining it, so that's easier, so they know where to achieve for. But at the same time, we're building capacity in Savory, very interesting growth category. We're building a large plan in that space because it's -- again, it's an area where we see the growth and we will be driving the synergies also going forward.

HNC, you heard us talk about HMO, the algalipids, eHealth, those are interesting segments. So summarizing, we're going to grow in high-growth areas. high-margin areas. We're going to build on the wins. We spend a lot of time rebuilding the pipeline, making sure that our win rate is up because that lays the foundation for the years to come. And at the same time, SA is working closely with the BUs to have the right innovation that we've got the right application capability, but also that we've got the right investments that will deliver the growth beyond 27%.

Now I wouldn't be a CFO if I would also not be talking about cash and cost. Also on costs, we realize that we need to step up. To support our margin ambition, we have launched a program that will help increase our EBITDA margin by 1%, and it's targeted at 2 areas. On the one hand, we want to drive operating excellence it's under the heading of Emmanuel as Chief Operating Officer, he will be driving the operational performance in all of our BUs. We'll improve our plant efficiencies will seek out where we can improve. AI will help there as well in order to become more effective because that's also the longer term play. It's not about getting the margin up in the short term but improving the margin on a long-term basis. At the same time, we need to be disciplined around our cost. And we see areas where we can grow. We can leverage the global enterprise system more shared services. That is something that we need to leverage. We need to leverage more tooling, but also on the back of the company that we've created whilst we're addressing stranded costs, and I'll come to that in a second, it's also an opportunity to once more look at the model that we have in play and seek those opportunities to optimize.

Same time, there's a supplier rationalization. We've delivered quite some synergies on the back of that. We've seen the potential, but there are areas where we can still step up. Take the area of digital and tech, very developing rapidly, and we'll take the opportunity to actually improve our cost base also on that front.

So work in progress, clearly driven its own at ExCo level, and we're committed to improving the margin and helping ourselves that on the one hand, you have the leverage element from growth. At the same time, we will apply a good level of self-help to actually get us to where we want to be.

At the right side, it's dealing with stranded costs. If you carve out 25% of your business, you're bound to have stranded costs. Now we have experienced were dealing with that and carving that out. So the estimated stranded cost is about EUR 75 million. That's only the upside of the delay in the transaction and gave us even 12 months more time to prepare for that. We already launched an initiative in '24 around this. We have clearly articulated targets with every what we call business partners, function owners, whether you own finance, HR, et cetera, you need to be adjusting your operating model for a company of EUR 9 billion instead of 12. The actions are set, the targets are clear, and we have identified how we will be moving that out of it. And Philip will be driving that in the period ahead.

Now every carve-out of the size of that we've done comes with what we call TSA or SLA, a transitional service agreement or a sales level agreement. There's no party that can sustain that because also ANH was leveraging group services. And whilst they become stand-alone, you typically have a period of 12 to 18 months, where you continue to service them which also gives us time to move those costs out of the system. That's why we have the confidence because we've done that in the past. We know how to do that. But that gives you also time to move that cost out of the system. so that your profitability of the company that we created is not impacted.

Now cash because it's a nice growth will drive EBITDA. That's the first element of cash. But at the same time, we need to also be disciplined on working capital. And whilst we've made good progress, the slide starts at the left side with a 31% in '23 I think at the merger, one of the questions out of the room was saying, are you guys now focused on working capital because you're even closer to 33%. I said, well, that needs to come down. And we made good progress. We ramped it all the way down. We delivered 27% in 2024, but we need to do more.

Now you see the uptick in '25. It's largely inventory driven. So we're today at around 4.8 months of inventory that needs to come down. It needs to be well below 4.5, and we'll continue to drive that. There is a program in place that we're looking at our supply chain operations. But we're confident that we can get it back structurally below 27%. We've done that in '24. We'll get back there. It will take a bit of time to get that out of the system because we also want to make sure that we have the right products and the like. But we will do that.

It's mainly inventory and it's receivables. We need to be disciplined around the payment terms, but also around in our overdue in the environment we are. We've seen that creep up a bit to around 6% that needs to come back to 4% where we were in 27%. So we need to apply good discipline on that front end will be structurally below 27%.

On the CapEx side, when we started our journey we said we'll be at an elevated level of around 6%, 6.5%. Now that was for the total group. For the core companies, that was around 6.5%. And you've seen that. That's what we've delivered over the last 2 years. that elevated level includes Bovaer for about 1%, 1.5%. Now that will come down. And that also gives us the confidence that we will be investing around 5% of our top line in line with the industry post the completion of Bovaer. So post '27, also that will normalize. And obviously, that will help us realize our cash ambition going forward.

Now we wanted to come back on Bovaer as well. It's an interesting investment opportunity. Today, it was mentioned by Maurizio, we have EUR 40 million of sales. We'll continue to grow that in 2026, but we're bound today by the capacity limitation that we've got. As long as the plant is not up and running, we cannot scale.

Now today, we're feeding more than 500,000 cars on a regular basis with Bovaer. So it's getting on stream. All the pilots with the dairy companies are successful. And whilst there is from time to time some noise in the market, that happens with every new technology introduction. And some countries are taking a more aggressive stance and making it mandatory. And when you make things mandatory to farmers, then you get a bit more feedback than you may wish, but everybody recognizes the potential and the need. And whilst sustainability as a topic maybe has parked a bit the pledges and the commitments haven't changed. And that's also the engagement when we talk to the dairy companies, that is there. So the question is how fast will it come? Our main priority needs to be finishing the plan so we can operationally grow our business because today, we can't we don't have the capacity to do so. We're limited to what we can produce through the production arrangement that we have put in place. whilst we're building that plant.

So it will come. We'll gradually ramp it up to above EUR 200 million, either through state sales or through license models. So that is something that we're constantly working as well, but priority #1 in '26 is completing the plant.

Now if you look at the investments on the other side, and I already alluded to that, and they came back also in the other presentation. So we're investing in future-proofing the growth. We're investing in capacity. We're investing in technology. We're investing in ingredients, whether it's in P&B, opening labs, Taste, Texture & Health also into new areas. We built a complete pet food plant in the U.S., also on request of customers, so also ready to grow on that front. And in agency, we continue to expand as well.

Then our outlook for '26. So we're going to grow 2% to 4% with a margin of 20% and a cash performance of 11% to 12%. It's a step-up versus '25. Maybe not to step up that you were saying, Hey, Ralf, you showed us 4, 5 great slides, but why don't we see that back. We also want to be a bit careful starting the year we know that we started the year in the first quarter where we kind of left it off in Q4. In Q4, we realized a growth of around 2%, and that's also our guidance for Q1. We will deliver low single-digit growth in Q1 because that's the environment we're in. And that also makes us a bit careful for the year.

Whilst the underlying metrics are all driving in the same direction, we will be improving and accelerating our financial performance. we will be cautious with our guidance for 2026. We live in a volatile environment. We don't know how the Middle East is going to pan out, whether it's just a matter of weeks or a prolonged event, we'll see about that. but that's baked into the guidance that we set now.

If you then look at how does that translate and Dimitri showed you that slide on how we're bridging it, we also want to provide a perspective on how a normalized growth for the company will look like. And there, you see the step-up in '27 to 46%. With 1% to 2% from normalization, but you also see with the growth actions that we're taking, that gives us the confidence that we will step up our performance. And we also wanted to bridge it towards the midterm target.

So by providing that intermediate step in '27, it also shows you the confidence that we are building ourselves on how to get from where we are today into 2028. And I think this is the actions. There is a clear outlay of what are the drivers to actually get us there. But in a normalized business, our normalized growth rate will be around 4% to 6%. And I think that was the question on how does that mean for TTH. So it's a normalized growth of 4% to 6% supplemented by 1% for Bovaer because we will be ramping up after '27. '27 will be a bridging year and then we'll ramp that up. The same for TTH. I think it came into Q&A, 4% to 6% growth but given the impact on the magnitude on the TTH business, that actually contributes 2%.

Margin as well continue to step up, by our own efforts by our program we want to have the operational excellence program completed by the end of '27. That's baked into that. And also there, we won't be careful in terms of the guidance, but we've got the levers in place, coupled with the growth to actually get us there. The same for the cash conversion. You've seen that it's working capital and CapEx driven.

Now where does that translate into in terms of leverage, we were at 1.9x leverage at the end of the year, looking at the continuing operations. So we landed at EUR 3.3 billion. And here, you see a bit of the moving pieces. On the one hand, you see the operating performance, 11% to 12% operating cash flow, netted off with the tax and APMs and the like. On APMs, I'm specifically calling that out. We had quite some leakage in the past years as well.

On the back of the merger, whether it was merger costs, integration cost to realize actually part of the cost synergies, all of that blurred into our cash pictures as well, that will reduce to around EUR 100 million in '26 as well, and that's netted off.

And then you see a big blue box, that's the capital return. So we continue to do a dividend of EUR 2.5 a share. So that's a little over EUR 600 million, club that with the share buyback that started today. We're in the market with EUR 540 million. So that's the big block in the middle. And then you see the deal elements.

So the debt transfer, remember that we had EUR 500 million of proceeds expected at closing, of which EUR 300 million don't show back in the net leverage because those are pensions and employee liabilities. It's important the rating agencies take it into account. So it's relevant from a rating perspective, a headroom perspective, but not from an IFRS net debt perspective. So I also want to guide specifically, so we don't have a misunderstanding on that one.

The EUR 600 million cash coming in and the EUR 200 million cash out for tax and costs. Then leverage, liquidity is important, but the reason why we put in the slide is that we live in a volatile environment, and the last 2 to 3 weeks have shown that. And we had a EUR 1.5 billion maturity because if you merge 2 companies, you live with the legacy of bonds and the like. Now the treasury team has done an excellent job in already refinancing that fully.

So we've been in the market a few weeks back. We've also dealt with the refinancing of '26, and that's why we issued the 2 bonds that will now mature in 2031 and 2038. completing a maturity profile which will never have a result in a financing risk because the maximum that you've got in any given year is around 750.

Now the rating agencies have looked at our plans as well. They took into account the share buyback and the divestment and they reconfirmed our ratings. We're firmly committed to a strong investment-grade profile because it will help us navigate through any scenario, and it's proven very helpful over time, and that's something that we're committed to as well, and that's baked in. And I think the strongest in the space that we operate in.

Now this one I do want to spend a minute on because I talked about leakage earlier on cash. There was also a leakage on earnings per share. And I don't think that, that was clearly articulated when we released our full year results. So if you look at in our core earnings per share, there was a 10% impact from nonrecurring items.

With the tuning of the portfolio, we put a couple of companies outside of the group, but obviously, that led also to some value adjustments done by either new ownership. So whether KD Pharma made some value adjustments under the ownership of private equity, but also a few of the others, and that led to a leakage and a value adjustment, which is noncash but it's still flow through our P&L in '25. These are not recurring going forward.

So also, the fall-through from the step-up in profit that we will see all the way from EBITDA to EBIT we'll have a much stronger flow through all the way down to earnings per share. So I wanted to make sure that, that was understood and not taking into account that there's a continued leakage because to some investors, especially U.S. earnings per share is absolutely important. So I wanted to make sure that we address that as well.

Then last, there was a question around why did you change the definition? It was on the quest of many of you because we were already adjusting for the merger accounting impact, where we had the step-up of intangibles of EUR 10 billion in our capital employed that we need to amortize over time. But why are you not adjusting for the other M&A? We've done that. The impact is not super big, but it's around EUR 130 million, EUR 140 million as well. what we baked that in, and I want to make sure that, that is clearly understood. In the corporate housekeeping slide earlier with the outlook, you'll have all the details. So for modeling purposes, we want to be fully transparent on that.

At the right side, a very strong improvement on ROCE as well. We started from the get-go. The reported ROE was around 5% in '23. Now obviously, with the portfolio changes and the definition changes, that was 6%, but what is important is that we realized a 5% step up on that. Part of it because of the portfolio change. It's about half of it. But also in the underlying business results, the ROCE improved by around 2.5%, which is in line with our commitment that we want to continue to step up our ROCE by 1% per year, and we will do that also going forward.

Now capital allocation policy. No big news. It's largely in line. We invest in future growth. We gave ourselves a 6.5% up until the completion of over so after that, you'll see that come back to 5%, but that's baked in into our cash target. So the cash target of above 14% has baked this in and will secure the future growth of the company.

Then dividend is important. That's why we changed our policy. We want to stick to the EUR 2.5 per share. It's a bit outside the earlier range that we set, but we are confident when we will go back into it, but we also flipped it around from a mindset we want to continue to grow dividend as well. For the first years, it will be stable, but our policy is stable, preferably rising, and we've changed that earlier.

M&A we're happy with the portfolio that we created, and that's the portfolio that we will grow. So don't expect any major transformation in '26%, '27. So M&A is not a priority for us in the periods to come. We want to accelerate the financial performance of the company that we created. And that leaves space for capital return. So you've seen the leverage earlier. I'm well placed in the guidance of 1.5 to 2.5x with a 1.9x leverage today. That's why we also launched a EUR 500 million share buyback ahead of collecting the proceeds from the ANH transaction as that is something that is important to us as well.

This slide actually shows what we've returned over the past period ever since the merger. So looking at '23, '24, '25 and the proposal for '26, overall, we've distributed around EUR 2.5 billion in dividend and a share buyback of EUR 1.5 billion, returning overall EUR 4 billion to shareholders. And I think that's important as well, and that should translate into a decent yield on the investment. What's also important is in the blue box at the bottom, not to be forgotten. We also took some feedback on that. Overall, we've changed the metric in our long-term incentive program. So we upped the percentage related to total shareholder return.

So the relative performance in our share and dividend against peers, so that is now 40%. And we also upped the percentage of ROCE to 30%. So now in the long-term incentive program, so the share program, holds 70% financial metric to make sure that we're absolutely fully aligned in terms of objectives going forward.

Now let me wrap up because I'm over time, I'm not so precise as my Italian friend. So -- but the message is important, and this is something that I want to leave you with. The transformation is done. We've created a company on which we will accelerate its financial performance. We'll grow the company, we'll grow our business. We'll apply discipline around cost. We'll apply discipline around cash. And with that, we will increase our financial performance on all 3 key metrics: growth, EBITDA and cash. And I think you've seen an exciting team that is behind that and will deliver on its promises. Thank you.

Now good the moment you're here. I'm sure you're anxious with a lot of questions. So Dimitri back on stage and then also the BU Presidents, then we'll do a bit of logistics. We've got ample time, so don't shy away and hesitate for any questions. It's the opportunity to also have the BU presidents. Otherwise, we're uncomfortable with everybody geared up. Dimitri, why don't you...

Yes, let's go.

Sebastian Bray of Berenberg Banca. I have 2, please. One on Taste, Texture and Health. A lot of companies talk about the benefits of GLP-1, but which categories in your experience are actually shrinking and which aside from there you are doing a lot better than would have been the case 3 or 4 years ago? My second question is on the Bovaer project. How has this gone relative to initial expectations, both in terms of cost, facility size and revenue opportunity? And what do you make of some of the more recent headlines coming out of Denmark? I think you alluded to some of the noise around the story. Has anything changed in this?

Maurizio, you first.

Is the mic working?

Yes.

Okay. So interesting question. Actually, it's the question I'm receiving almost every day at the moment. So GLP-1. GLP-1 is a strong trend, attracting a lot of attention. But when you look at the real impact on the market in the short term is not so huge. But clearly, it's an evidence how consumers are shifting dramatically, okay? Now the impact today is very limited. However, what everybody is looking at is the impact of tomorrow. We are well positioned in that space. Why? Who is consuming GLP-1, what it is doing basically?

It's kind of reducing dramatically or drastically for a certain period of time, consumption of regular food. And then when it stops, it starts moving into a kind of more dietary supplements or nutrition food. What is the nutritional food they usually use post GLP-1 or during GLP-1? It's high protein, high fiber. And for example, dairy is highly consumed. Now you lose also a lot of muscles. That's why you need to reintegrate the muscle mass through protein and movement.

So most of the category, let's say, 1/3 goes after 2 months, 3 months of regular consumption. That's what we have seen. And then the other 2/3, actually, they have a different habit other than normalize, but keep consuming those fibers and protein, those nutrition bars, those dairy products where we are heavily present. Energy drinks sometimes if they feel a little bit the necessity of getting a little bit of energy, and alcoholic drink is not highly consumed, by the way. But this is where the category are shifting.

Today, honestly, we don't see a massive impact. In our portfolio, actually, it's the opposite. We get the benefit of high consumption of the product I just mentioned.

The interesting is that you were relating to some of the segments where maybe we'll lose, snacks, right, some of that. We don't see that yet, but any change, any new ingredient will help us in the formulation. Now it's also interesting is, I think there was a note out yesterday from Lindt chocolate, which I really could advise you. I think it's one of the best chocolates of the world. And Lindt indicated that the consumer in the U.S. were taking even more. So they didn't see that breakthrough. I mean that was surprising for me to read because the thought will go down.

But it's still too early to say. But what we do see is building on what Maurizio was saying, is GLP-1 is impacting how people think about health. And there's a more aspect, more of fiber, proteins, gut health because it's impacting your gut with probiotics, where we're strong at, and it's less sugar, less fat, less salt, and that's also where we are clearly positioned. So we definitely see it as an opportunity.

Now then on Bovaer, let me highlight a few things and then hand over the science question to Sarah. Sarah is also here, a member of our Executive Committee being Chief Science and Research Officer. By the way, Philip is also here at the back. He always likes to sit at the back. He is our M&A Transformation and Strategy Officer. So he can also jump in if he wished.

Now Bovaer, so let's start with the sales. It was ramping up quicker than we thought. So there was more appetite than we initially thought in our business case. And we were quickly into a EUR 20 million, EUR 30 million sales with the intermediate capacity we had. And therefore, we also decided with that quick adoption from the branded dairy consumers who all came out with methane reduction pledges, wow, this is great, right? So we decided to scale up the investment in Delry based on that initial acceleration. That created also a slightly more CapEx than we originally had in the case, but also with higher capacity with a little bit of delay because of the extended capacity.

Now let's say for sales first. Now that EUR 30 million, EUR 40 million is now our maximum because of the intermediate capacity. And Ralf was already alluding to it, it's a strange world. If some people say that mandatory, you need to take stuff, you get more pushback. And if you say, "oh, this is a great product, let's use it". I think that's a learning from Denmark. But let me make it very clear. This is the most researched ingredient we've ever brought to market at DSM-Firmenich. It's more than 100 studies. It is safe to use. It took a long time before we got EFSA and FDA approval. We've got all of that.

In Denmark, very interesting to see is that I think just beginning of this week, there was this Danish National Dairy data out who will check the health of the cows, which was one of the "discussions" in Denmark that health became ill -- cows became ill because of using Bovaer because they needed to use it mandatory. That data came out and there's a health rate for cows. I didn't know there were health rates for cows, but they're managing it. And guess what? The health rate went up.

Secondly, the yield, so the production of milk from the cows also went up while still using Bovaer. So we feel very confident that this is a scientific proven safe to use ingredient. But hearing that from me as a CEO, you could say, yes, okay, what do you know about all the science, so I want to ask Sarah just to give the real science behind it.

Thank you, Dimitri. And I think that for part of your answer, it's the first time ever that you undersold. And in fact, that we've done 153 clinicals with Bovaer and the evidence is super, super clear of the significant reduction of methane production as well as that the health of the animals is not impacted. So I think you undersold that by saying just above 100 because it was 153.

The other really important thing that you're talking about is with 153 studies, we have a lot of data. And what we started seeing in some of these clinicals is some anecdotal evidence of increased health of the animals or increased fat in your milk content, which is something that's important to dairy producers. And so this is where we're really digging into those data to try to identify some other key elements. That's an ongoing research project that we're doing, but we're excited about that aspect.

But coming back to your question. So I think after an initial faster ramp-up, we have had a delay, partly incurred by ourselves, but also partly because of all the turmoil around it. And obviously, with the U.S. backing and parking a little bit sustainability. However, like I said, and I think Maurizio was also alluding to it, I think, on an earlier question on Bovaer, our dairy customers want to talk to us, obviously, because of a great engine we built on TTH, but also about Bovaer because they have publicly made methane pledges for reduction. So it's still very high on the agenda, but I think we will -- we are about 1 year late in our plan going forward.

It's Matthew Yates from Bank of America. There's a lot of information to digest today. I appreciate the work that's gone into it. And Ralf, in particular, trying to sort of bring it all together and summarize it at the end. I wanted to ask you about the margin guide for this year, around 20% because as you said, your exit rate last year was getting up to that level. What's going to hold you back this year? Is it incremental currency? Is it the mechanics of the TSA? Do we need to be more patient for mix? Like what's -- maybe I am being greedy, but why not more margin expansion this year?

And second question, if I can, is for Emmanuel on P&B business. You talked about shedding the nondifferentiated ingredients. It's still a EUR 900 million portfolio. How much of that is truly differentiated versus something that could see competitive pressures over time?

Could you give the mic to your neighbor, who will go next.

All right. Let me start with the margin. Great question. Of course, that's where we landed in the second half. If you look at it on average, we are around 20%. But at the same time, we wanted to be a bit careful when we're starting the year. You pointed out one clear lever, which is currency. We have about a EUR 70 million headwind ahead of us, taking into account that we hedge about half of the exposure that we've got. And it's in the slide with the housekeeping rules that we've reduced that exposure also following the revision of the portfolio.

So our dollar exposure came down about 15%, 20%. But moreover, our Swiss exposure decreased by about 40%. So that is a good reduction, but it's still there. That obviously has a bit of pressure, certainly at the start of the year. So -- because that's where the majority of that impact is. And with the environment that we're in, we just also want to be a bit careful around our margin, whilst at the same time, take the actions that we highlighted in the presentation. So we will be working on improving. But as we're guiding at the start of the year, we want to be a bit careful on that.

With regard to Ingredients, we -- at this stage, you're right, it's around EUR 900 million total revenue for Fragrance Ingredients. And we -- today, we consider 85% is differentiated. And as I was trying to explain, so first of all, it's composed of synthetic, naturals and biotech. So it's not only synthetic one exposed sometimes to Chinese competition. So it's much broader than what it is. And as I'm trying to explain, every year, there is a continuous cleaning and at the same time, innovation flow. So we produce new innovation every year.

We clean the portfolio from, let's say, less of a specialty outside of the portfolio from make to buy. And also, we have also a very interesting ecosystem where we have alliance with some producers, but also joint ventures, and we play with joint ventures and alliance in making this really ingredient machine being the best differentiated machine of the industry.

By the way, in addition to the EUR 900 million you're referring to, we also have our captive ingredients. So it's end-to-end.

Now maybe I wanted to add something also. Please have in mind that with our ingredient, we want to serve our perfumery product, okay? So when -- in fact, and we have sometimes limitation of capacity sometimes. So we always put -- I would say, we make sure that perfumery is -- and our perfumer will be happy by feeling that. At the same time, we also like to have a very solid business outside of the internal use in order to bring competitiveness, in order to bring size, scale. So that's why it's a combination of internal use and external sales.

[indiscernible] from Impax Asset Management. My question is on the pipeline. You mentioned it's very active at the moment. Can you perhaps break it down by business unit, by type of customer, category, just to help us understand where this activity is happening? And there seems to also be a delay in converting some of that pipeline into sales. So what's causing that delay? Why are the customers sitting on the sidelines? What are they waiting for essentially?

So we do business unit by business unit because I think it's per business unit is slightly different. I think it's important to understand, and I think Emmanuel said it very well, but it's valid for all BUs. If you win a brief, it doesn't mean that tomorrow, you have sales. You win a brief and then together with the customer, there's a launch of the product and then it comes, there's always a bit of a delay. But the winning ratio are obviously important to get a bit of a forecast on what the sales is. But let's do a quick round on what's in your pipeline.

Let's not dissect it in all types of dimension you wanted to. We have a fact book where you can find a little bit on how that's been done. But just to give your key areas of what you're most excited about in the pipeline, if I may rephrase your question a little bit. Let's go with the Swiss.

Some of the -- when you look at our pipeline is growing. So it means that we have a project with customers that show interest in what we are generating. Now I was showing the synergies pipeline, the EUR 450 million, which is very proportion of the overall pipeline. In our portfolio, however, it's not just the pipeline that generates growth. We have existing product on the market that are still growing, but they fluctuate depending on consumers and the economic situation is evolving.

But if you focus just on the pipeline, in our business, you transform your pipeline in 10 to 15 months, okay? Because you work on the project. The more you bring innovation technology, the more require work with the customer. So the project in the pipeline, you see it. One is adopted. That's where we shift the positioning of the project, it is adopted by the customer, then it is converted into sales. That's the way it works. In our industry it takes -- really this process takes between 12 to 15 months. Then depending on the economic situation, can boost, can soften, but that's the dynamic.

Now we are very well positioned on pipeline. Actually, you have seen we have a very, very strong pipeline. Now we are very cautious in our numbers. We are very cautious on the economic situation, as I was saying. Without the current economic situation, we will keep flying in TTH, we're flying 4 to 6, 5 to 7. But we are very cautious on the current moment. So we are not over selling what we are doing.

Alex?

So in the case of HNC, the dynamics are similar. The only caveat or the difference would be that, as I explained earlier, the solution selling is more recent for HNC. So we're scaling up the pipeline. We've done that over the last few months, and we're looking at a pretty solid win rate. So we're confident and to deliver on the synergies and on the growth side. So we're scaling up the size of the pipeline as we speak.

The pipeline on Consumer & Beauty has always been extremely big, I would say. And remember, there were 3 different categories, the ingredients, the fragrance design and the technology. Now I think I wanted to answer to your question as following. We decided to split the organization from the global consumer brands to the local consumer brands because the speed from research, innovating and deploying is faster, much more faster than what it is with the global consumer brands and then sometimes also in Fine Fragrance. So that's why overall, we will accelerate the deployment, thanks to, I would say, the increase of our focus on the regional consumer brands.

I think that's an important point. Remember that I said that Emmanuel is working on building up that regional local percentage, so it's 40-60. In TTH, it's about 80% local, 20% global. And with Alex, we discussed it's 60-40. So the real growth is in the regional ones. Let's not forget the global ones, but we need -- and so that pipeline -- so this is the pipeline, which you most alluded to '26, '27 but we also have a pipeline on science and research, which has maybe a slightly longer time, but we're also here to build a company for the future. So what is in your pipeline, Sarah?

Yes. Well, there's a lot in our pipeline. I think one thing that you would understand is the great power that we have at DSM Firmenich and our innovation is we have platforms that can serve all of the businesses. So for instance, you heard Alex talking a lot about healthy aging. And we have a platform of studying cell senescence. So that's basically when cells as you age stop dividing, but they stay around and they actually make the other cells around you start aging faster.

And this, we first launched in our beauty business and -- but we have now leveraged it and start screening it for healthy aging products for Alex's business in HNC. These same types of platforms are being used also in TTH for pet care. And so this is one example of leveraging that power of the group to develop products for all 3. The same is true in the microbiome. Everyone thinks about health from the gut, which is super important, not just for your gut health, but your mental health and everything. But you also have a microbiome on your skin, in your oral cavity.

So it's super important for our oral care business in Perfumery & Beauty. And so leveraging the expertise we have in microbiome across all of our businesses to have a big impact in the next -- both mid and long term.

And I think it's important for you to understand why we have these 3 business units as the core of DSM-Firmenich. It has to do with the scale of science and research you do. Let's go back on the innovation platform. Microbiome is as a platform working for HNC, TTH and also P&B in the skin care area. Then biotechnology, building the biotech ingredient for the toolbox is valid for all 3. They all have fermentative products in their ingredient toolbox. Three, it's all about sensor and receptor technology.

Now you could say, well, is that all 3. yes, all 3. Perfumery & Beauty, obviously, then also in TTH. But Alex was speaking about medical nutrition, about the taste. So also the sensory and receptor technology competence we're building is really having scale for all 3. And then last but not least, AI, and we're all working on that. And that is helping all BUs. So we have that scale. Therefore, I was saying the 9 billion, you really need the 9 billion, 10 billion companies to see to have that scale for innovation and science research to really make that difference.

I think that what's also really important, what you highlighted, Dimitri, is it's not just -- in modern science, it's not just about single science capabilities. And in fact, as we talked about, the bedrock of DSM Firmenich is our unique ingredients, be it hero ingredients in Alex's HNC business or our captives for perfumery. And we combine our data science technology with that of receptor technology, biotechnology, all of that combined to be able to discover new ingredients that can perform in the different business units. And so it's that combination that can help you go faster and deliver unique differentiated products that also makes us special.

Chetan from JPMorgan. I had a few questions. I'm just taking the liberty of Ralf saying now is the time to ask questions. So I'll be short. First, I just wanted to understand this concept of market normalization of 1% to 2% growth. I know you're not the only one, some of your competitors also talk about it, but what will normalize? Because I can also argue, you benefited in the last 3 years from the super cycle in fragrances, which probably nobody saw. So why would that not normalize on the other side, which is on the downside?

So I'm just curious what is this market normalization that we should have in mind, which will drive that 1% to 2% incremental growth over the next 12 to 18 months? The second question I had was -- just curious on this cost optimization program that you are talking about, which is 1%, again, margin improvement next year. How should we put that into context of company trying to grow more at the same time cutting costs? Usually, you want to reinvest more to grow more. It just seems a bit uncorrelated in a way. And last question, any impact you've seen from the Middle East conflict in any of your businesses, whether on fragrances, on raw materials? And is there any seasonality on margins that we should have in mind? Is 20% a good number for all of 2026?

Let's start Middle East first with the impact on Q1, and I will do normalization.

Yes, happy to do that. So Middle East, I think it's a little early to call that out. Maybe framing it first, what is our business in the Middle East. So overall, we have about EUR 250 million sales in the region. Now the big question is, of course, is this an event of a couple of weeks? Or will it drag on much longer? We're currently anticipating that it's a matter of weeks and that things will then stabilize. If you look at it, we're, of course, doing our homework, what's on the back of that. Now if you look at, for example, energy and the like, we're 80% hedged for the quarter in Q1. We've got a good hedge rate going into the second quarter and the rest of the year.

But obviously, there's always some sensitivity around it. So we don't expect big on the top line, could always be a couple of million around that, but on the impact on the quarter, but let's see how that overall develops into the year. I think at this point, it's a little early, but obviously, we're looking at it, and we're preparing ourselves to deal with that.

And our Middle East sales is about?

Sorry?

Our Middle East sales.

Middle East total is around EUR 250 million across all of the 3 BUs with obviously a bigger presence in P&B than for TTH and HNC.

So then maybe on the cost part, you need to see this as hygiene. So we're not walking away from investment in science and research, neither on the normalized CapEx of 5. So we're not jeopardizing growth. It's just hygiene. If you merge the company, you've done your portfolio tuning. You need to do some hygiene work that will deliver the 1%. It sounds easier while I'm saying it. It is executed in steps, but has nothing to do in touching on the growth. It's hygiene after the whole transformation.

Then coming back on the normalization. Yes, it's a sort of a favorite term everybody uses, and we don't know exactly what the definition of it. But I think it's clearly indicating that the second half of last year, we saw some slowdown with cautious consumer behavior. We labeled that as something that will normalize. And it's clearly indicated that we need some normalization to get the step up from 2% to 4% to 4% to 6%.

Now you've seen that if that is a half year, it's about a 1% growth. If that continues for the full year, it could be 2%, but it's not as scientifically proven as the answers Sarah normally gives, but it gives you a bit of a feel on how we think. We think that -- and I said it before, if there is a lot of uncertainty, consumers become a bit cautious and then they either pile stock or they destock. Well, in this case, it was destocking. And if you look at our customer behavior, we do see that stocks are relatively low in the chain because you get all types of urgent orders and the like.

Now that is now in the Middle East situation, even more exaggerated in that space. But we feel that, that will normalize to normal levels and then that's the 1% to 2%, which we've indicated on -- based on what we see in the second half of last year. That's all. No rocket science.

I think there was a question on the -- is behind you, was it? Then I come back.

Yes, a couple of questions. Alex from Barclays. On HNC, I think -- thanks for the presentation. You mentioned upfront, you didn't think the end markets were particularly discretionary. But at the same time, you did call out the slowdown there being in part by weaker consumer confidence in North America. So could you kind of like square that disconnect for us? Is it -- are you actually seeing slower growth in the end market from the end consumer? Or is this about destocking? And maybe which areas have you seen most pressure?

And then maybe if I could ask a second one, just coming back to the normalization point. If you could get a bit more granular, what would the maybe 3 end markets that you would sort of most expect normalization to occur? Could you sort of call those out?

So great catch, Alex, on the discretionary and nondiscretionary. So I mentioned part of the portfolio is nondiscretionary, another part is. And if you look at the segments of HNC that I shared, probably dietary supplement is the one where you could say, nah, do I really need to continue when I need to fill my kids and my family. And actually, if you look at North America, and that's where it's crossing, we have eye health that is mainly dietary supplement and is purely in North America or mostly. And then our consumer ingredients is also quite big in dietary supplement in North America. So that's where it's crossing.

And then to your normalization bit, I think Perfumery & Beauty have shown in Q3 and Q4 that they're pretty solid in their growth area. So it's predominantly in TTH and HNC. Building on what Alex just said, the normalization in North America, very important for us also in HNC and then maybe the global accounts, which I was also referring to it. If you come to a brief and you win a brief and you need to create a global product launch, that's a big investment.

In uncertainties, then people wait a little bit for that normalization and the launch then will come. We also saw that during COVID, post-COVID a bit. We see that cautious launch idea from global customers. So 2 areas, global customers with the timing of product launches and secondly, the North America continent.

Yes, can we go on the right side?

Sebastian from Citi. Two questions, please. First one on your '28 margin target. The majority of the uplift is supposed to come from operating leverage. I think the industry doesn't have the greatest track record of delivering operating leverage. So just wanted to understand what gives you the confidence, bearing in mind that cost synergies are behind us already. Second question on Bovaer again. When it was still called Clean Cow, I think you gave us a number of EUR 1 billion to EUR 2 billion, and now we see EUR 200 million plus on the slide. If you could just contrast those 2 figures, please?

I'll do Bovaer.

I'll do the margin. Thanks for the question. So if you look at it, it consists of a couple of things. So on the one hand, we'll apply a good level of self-help to actually drive up the margin. At the same time, it's leveraging the growth. You also see that, and I think the biggest example is if you look back on the development in TTH, 7% organic growth, 2 years straight, a 13% step-up in EBITDA, 2 years straight. I think that is the driver also for the margin.

So with our confidence in moving towards 4% to 6% growth across the businesses, moving in the right areas on where we're growing because we want to accelerate the growth in the higher-margin businesses, that will drive that uplift. So if you look at the margin breakdown, leverage is one, self-help is one, but then also Bovaer, it has an above-average margin. So it will not only help acceleration of the growth from a group perspective, but also from a margin perspective.

And I think we've shown a little bit of leverage throughout the period. Then on Bovaer, indeed, the total market we're seeing is EUR 1.5 billion and EUR 2 billion. it's billion. It's still there. What we're talking about is the Delry site, where we make one site on Bovaer, which is predominantly servicing Europe and also doing the premarketing for the U.S. and building that market.

So we think the market will need 7, 8 of these plants. Let me also make that very clear. We will not build those plants. We will create that concept, proof of concept in Delry. We'll build that business. And then we go for, and I think Ralf also alluded to it in his presentation for a license and technology model. So we basically sell the technology and the license and then we get royalties back based on every kilogram of Bovaer sold. That's the idea. And therefore, the top line will be limited to above the EUR 200 million because that's a Delry site, but we will help our EBITDA and our net profit evolution from that when we do that licensing.

Now we have had discussions in Asia. China is a possible opportunity. Brazil is a possible opportunity. But they're all saying, great idea, we're interested, but we want to see the site up and running. I could basically not blame them because I think if you pay for a license and a technology, you want to see how that works. So therefore, it's very important to have that Delry site up and running commercially in 2027, so we can also take that next step. So the EUR 1.5 billion to EUR 2 billion is absolutely still there. This was the turnover linked to one site.

I think there was another question, maybe to your neighbor.

Wim Hoste, KBC Securities. I have 3 questions, please. First one on HMO. Can you elaborate a bit on the regulatory framework, also the kind of contract book you have, how fast you're going to expect the ramp up towards the high penetration rates that you cited in the presentation? So that's about HMO first question.

Second one is on the eye health business. What's the ambition to broaden that geographically but also product-wise? Is that a possibility? And then the third question on TTH. Do you see, yes, any impact from consumer being constrained going towards private label and things like that? Any thoughts on that?

So on the HMO question, we have registered our HMOs in over 100 countries. And as we speak -- so on the first 3 HMOs and as we speak, we're registering the rest. So the pipeline is there. We already have good engagement with the local authorities. The first part is always the most cumbersome part. So once you have developed that first route, the first HMOs, the next ones are a bit easier. And I include China in this, even though China has very strict and relatively long processes, longer than what we expected. Once the route is open, it's much easier and faster. So that's on the HMOs. Does that answer your question? Or what is...

You can put a bit more numbers to this.

So I hope we'll be around EUR 100 million in the period, of course. I will not disclose the exact number where we are today, but the traction is good. And building on what Alex said, I mean, we've got 3 HMOs approved and we've got 7 in the pipeline and that there's a lot of development there, but we all the time guided for EUR 100 million over the midterm period. And you can look at him whether he's confident in that or not.

And it's not that we don't want to be transparent. I hope you understand that this is live. And I know there are a few competitors out there who carefully listen to what Alex and ourselves are saying, right. You had that second question.

Yes, we're shifting the category. Now on eye health, right, that was your other question. So look, North America is the biggest dietary supplement market in the world. We want to make sure that we have that market opportunity under control before we start spreading the brands left and right. Having said that, we have signed an agreement of a licensing model of our brands in China. We have signed that a couple of months ago. We get royalties for that. And in Brazil, we're partnering with a similar model with a big pharma company that has the exclusivity of distributing our cultural brand, and we're starting later this year. But we're doing that very selectively in large markets, but our focus remains North America.

And it's a good point. I'll come back. So it's a good point. Let's also make sure that we tried that earlier in China. And we also learned from failures we made. So you really need to do that locally and not with a global mindset. It's not going to work. So that's why we do the licensing model with someone locally in the area because there it is too ideal to think that we can do it from the U.S. or Europe. Then I think you had a third question.

Good question. In this kind of a current situation, you will see a shift of a consumer moving from some brands to private label. Ours is a normal transition. So we are present in those segments or sales channels as we call them. And we constantly see this kind of shifts when the geopolitical or the economic situation shifts. We saw a lot during COVID. Usually, it's a transition, but going back to discussion normalization, you see this flow moving back and forth.

But our technologies, our products fulfill the needs on all segments. So for us, it's very easy to shift. Actually, on private label, you have a fastest implementation of certain projects, especially during this time, they want to shift to launch new projects. So it's quite an opportunity for us.

So we love our customers. But at the end of the day, we don't care whether it's a private label or a branded label or whatever label as long as our ingredients are in.

Let's stay on the left-hand side.

Charlie from UBS. Two quick ones for me. First one is when we talk about the normalization, part of the issue has been the amount of value focus that a lot of your particularly global customers have put through. Is there ever a discussion from your side where you say, look, if you're going to keep taking pricing, we need to grow too. We need to start taking pricing over and above raw materials. I know that's not an industry norm, but is that something that you've considered given their approach?

And I guess linked to that, we talk about organic sales growth targets. Why not organic volume growth targets if that isn't going to change? And then my second one is a very quick one for Ralf. On ROCE, 11% last year, is it 13% to 14% by '28 based on the targets? Is that rough math the right way to think about the ROCE?

Let's start with that, and then I come back on OHT. We would love that we grow with 5% and a minus 5% on price. So look, let's park that.

I think you would like it in the end. Now on the ROCE, yes. So we'll continue to grow by 1% per year. So that is also what we're targeting in the medium term going forward. We need to do a step up with the focus and the acceleration of underlying performance, you should see that flow-through of EBITDA and EBIT and with that the step-up in ROCE.

And then I think a very fair question. So we manage the business on gross margin. So let's make it a little bit black and white. So at the end of the day, we don't really care what the price is because it depends on what's in the brief. So all these business unit presidents and all our organizations get a brief. And on the upper right corner of that brief is a sort of a range of which the solution we offer, the formulation we bring should fit in.

If we're outside that range, if we are outside the upper side of that range and it's too costly, they're not interested. So the request is already in that range. That's one. Secondly, we sometimes make higher margin on lower-priced products than with higher-priced products, because of the margin step-up and the brief how we do that. Because at the end of the day, if it's a high range, you can play with more ingredients in your solution. If they want to do a bit of a mass positioning, then you need to -- you are a bit limited in terms of which ingredients you can use.

However, the margin setup is important for us. So we track the margin as one of the key areas. Now on our guidance on 2% to 4%, but also the 4% to 6% plus 1% on Bovaer, the key element is volume growth. So it's not like volume growth 0 and the rest should come from prices. Because of that, we assume that it is -- a big part is volume growth. However, if we move up on our higher quality portfolio, obviously on average, your price should go up as well, save [indiscernible]. Now in this today's world, there is no [indiscernible], which is to give a bit of feedback on how we look at that. But this is really market-driven growth, which will be predominantly come from volume.

Yes, and we switch to the right. Martin was so courageous to be on the first.

This is Martin Roediger from Kepler Cheuvreux. I have 2 clarification questions. First is on your midterm target timeline 2028 plus. Do I understand that correctly that you want to achieve targets in the year 2028 and also beyond? And secondly, related to that, the 4% to 6% organic top line growth, plus 1% contribution from Bovaer, that is just for 2028 and beyond, but not the average over the period 2024 to 2028?

And then secondly, on Bovaer, in particular, you target more than EUR 200 million sales. My understanding was that the plant in Delry will already generate EUR 200 million sales. So the plus figure is coming from the license income you may get from sales and other regions. Is it the right understanding? And in connection to that, what will happen with the EUR 30 million to EUR 40 million sales you generate today with partners? Will that stay and come on top to the EUR 200 million sales you generate in Delry? Or will that vanish?

Yes, happy to take the question around the target. So with the guidance, and that's why we also showed it that we have '26, '27 and a step up to '28. We want to deliver those targets in '28. But we also said a plus beyond -- we guided for a midterm target. The midterm target would not be only for '28. Now that is the target that we will realize in '28 and then after. Now why we also set a normalized growth of 4% to 6% plus 1% on Bovaer, whilst we're ramping up and we're expecting that ramp up, over time, there will also be a moment when that will start normalizing and that will not be an internal growth. So that's why we said, look, let's first get that.

Let's also bridge it on how to get there. But I also want to stress and come back to the point where Dimitri finished. We are focused on '26 and '27 to deliver and lay the foundation to get there. But we also wanted to say, look, that's the company that we created. And with that Bovaer coming into play, that's where we need to be at in '28, but it will not grow forever because the acceleration moment of Bovaer at some point will level off as will synergies. But the focus is on getting to that range in line with the earlier commitment.

Okay. Then on Bovaer. So indeed, the EUR 30 million, EUR 40 million will then move to the Delry production. So that's not on top of. It will be produced by Delry at a slightly better cost of goods sold than we now pay for the intermediates. So that helps a little bit the profitability. Obviously, we will take a little bit as a sort of a second backup supply, but the EUR 30 million, EUR 40 million, that was also a little bit the idea behind it that we do the premarketing so that we already have the capacity partly filled the moment that we start up the Delry facility.

Maybe -- and then you had your question on EUR 200 million, why is the plus. So the EUR 200 million -- above EUR 200 million is linked to the Delry site. So any other deals we do will then be additional ones, right? So -- and the additional deals will not be that we build a plant and sell. So then you will see a limited number of sales growth, but that goes one-on-one into your bottom line, right? So the EUR 200 million plus over will be the turnover, and then we go into the different models of capitalizing on the value.

We go back. Now we go -- we stay left. All right for the room. Ladies first. We have only one mic. Sorry, I didn't see. Okay. I'm okay.

Lisa from Morgan Stanley. I just wanted to bring it back to your EBITDA margin and the question from Sebastian. You talked about that your margin would be driven by higher value opportunities. But you feel that your margin has already benefited from very strong growth in cultures and enzymes as well as in Fine Fragrance. So it would be helpful to understand where these high-margin subsegments are hiding. And I can sort of think of sun filters potentially, but it would be good to sort of hear that from you.

And then secondly is a small question on HNC. You structuring the Q&A on solution selling. How much of HNC today is solution selling? And how should we think about the opportunity there? And also, where do you see cross-selling opportunities with your colleagues in P&B and TTH?

Let's start with Alex and then maybe also jump on how you improve your EBITDA by growing faster in the high margin, and then we do the same for TTH and P&B.

So broadly, roughly, 1/4, as I mentioned, of our portfolio in HNC is vitamin, differentiated vitamins. The 100 that Ralf mentioned on HMOs down the line. The rest is linked to solution selling and I include eye health in this, even though it's a B2C or a B4C, it is a solution to consume. So that's more or less what you would have. And your second question was on the cross-selling opportunities. So we do have customers in common with TTH in particular.

And we do see opportunities that we have captured already of opening doors if it's a customer of TTH interested in broadening the portfolio into supplements or adjacencies that is working and vice versa, whether global or also regional players. So this is a reality already.

TTH, high growth, higher margin.

High growth, high margin. We grow the margin because we selected the portfolio in line with the high profitable business. The opportunity at the strategy I presented are all focusing on fast-growing, high-margin businesses. If you look at those, I presented the 6, they are all high margin. We have quite good margin average at the moment, I would say. But through those investments, we will clearly get where we want to go. I'm quite confident about it.

But it's gradual because if you grow the upper end, it takes a while before that really has an end. But if you do that a couple of years, then you...

Yes, it's true. We made investment for Simple Enzymes with -- we have the best expert in the room, Dirk, managing ingredients. We invested in our major site and in China, EUR 70 million, where we are expanding the capacity or scaling up a certain enzymes. This will bring just a very, very high margin into the portfolio. Cultures is another area where we're going to grow substantially the margins and Taste is an average high-margin business. So the more we combine the solution, the more we grow the margin in the mix of our portfolio.

Close with P&B?

You remember the slide where we show Accelerate as a clear priority. It was about Fine Fragrance. It was about skin care, where I put skin care is a part of Beauty & Care. So today, some filters is under recovery mode. You saw that quarter after quarter from a very big drop in Q1 2025, but gradually, we improve this moving forward. So I think the accelerate of Fine Fragrance and Skin Care will also help to increase our margin.

Now I think also a big bunch of the margin growth will come from the volume growth and operational excellence. I did not insist too much before in my presentation. And you're right, in the field of perfumery operational excellence, sometimes a bit difficult to be developed, but it is really what we are doing as we speak, coming together between ingredients and fragrance to really make operational excellence being a reality.

[indiscernible] from Impax. So a question on TT&H, please. Some of your global customers have spoken publicly about various levers that they could pull to drive volume growth. It could be promotions, innovation, perhaps taking prices down. I appreciate that it's early days. But from your perspective, which of those have been most and least effective?

TTH.

You talk about customers?

Exactly, your global customers.

But I would say the most effective at the moment are the internal growth are the local customers are more agile, they address, they are closer to customers. Now I never will count only on one set of customers because the consumers really are first very, very close to A brands and they love A brands. So maybe there are shifts in, let's say, a quarter or two, but then they always come back to A brands. So you don't let A brands go.

In terms of driving growth, one element is bringing innovation, innovative solution, more healthy products. We mentioned GLP-1. GLP-1 require a lot of work on when you work with the fibers or protein to work on the off notes and balance the taste. Like Alex was saying, you won't use medicine if they don't taste good, but the food is even more important. The food doesn't taste good, you won't buy even if it's the most healthy beneficial food you can eat. So those are where with Sarah, we're working constantly receptor-based technology, clean label through enzymes and cultures. That's where you generate the growth and the margins.

You're pretty lonely on the first row.

I thought I would be part of the company. I'll give you my CV later. Giles Money from Allianz. Just trying to -- maybe one for Ralf, but the buyback philosophy post the EUR 500 million, there's a few moving parts. Obviously, I've got to think about the RCF. I've got to think about other things. But is there any chance you could just share some philosophy beyond that EUR 500 million?

Why the EUR 500 million?

Well, why that? And then afterwards, what kind of -- what are you thinking about as an expectation?

Is there more to come?

Yes. I know, it was -- that's why I was asking. So no, the EUR 500 million, obviously, it's always a bit of a balancing act where you look at, look, where am I in my leverage? What's the target range that I want to do? And we communicated a leverage ratio of 1.5 to 2.5. I think earlier in the year, I said, look, I'm comfortable being a bit more at the conservative side navigating through. At that point, we didn't have the visibility on closing the transaction, whilst we were confident as long as you don't have a signature, there's nothing you can do. And that's why we also looked at why EUR 500 million.

We're always balancing around our ratios as well and looking at where are we from a rating perspective, whilst at the same time, keeping sufficient flexibility to navigate any circumstance that you come through. And we are at 1.9x leverage at the end of the year. I think that's a comfortable level somewhere in the middle. And that's why we're balancing. And that's why we also said looking at our capital allocation, next is that we want to invest in the growth and its dividend.

You do want to give yourself space for M&A and then capital returns. But whilst we also said, look, our task now is to focus on executing and upping the financial performance of what we've got, that opens the door for capital returns while keeping the metric in play. We want to have an efficient balance sheet, not a lazy one. That's why we also said, look, the EUR 500 million will keep us there. And if you look at where I am today, I started with a EUR 1.9 billion. I'm going to spend the share buyback. We're in the market as of today. So that's gone, before I actually have to proceed.

So it's also navigating that landscape with the rating agencies because I'm getting ahead of myself. Normally, my CEO would say saying, well, you should first get the money before you spend it. But this is also showing us the confidence that we will be able to navigate through that, and that's also what we discussed with the rating agencies. But it's that balancing act was at the same time saying, look, we will have an efficient balance sheet going forward. And through that lens, we're going to look at that.

But basically, in short, I think we showed the evidence that we're not sitting on our money just to go. We clearly indicated M&A is not a priority if you take the policy. My answer will be we cross that bridge when we're there.

Okay, also looking at lunch to be prepared, but I mean we are here for all of you. We can continue the conversation. Is there a final last question and then we move into lunch. I think it's worthwhile to spend the time. I appreciate all the questions and your interest. But is there any last question you want to raise in the plenary session before we go for lunch? No, the magic word has been lunch.

So yet again, thanks a lot. We've gone through a lot. Really appreciate that we took the time to go through. I hope you get the feel that we will grow what we have with all what we have, anchor what we do and deliver on the promises, just not for 1 quarter, but consistently over the quarters, over the years with a clear pathway to the type of company we want to become. Thanks for your interest and speak to you at lunch. Thank you.

Good morning, and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO; and Ralf Schmeitz, our CFO.

This morning, we published our full year 2025 results on a restated basis, together with a presentation to investors, which you can find on our website. Here you can also find our disclaimers about forward-looking statements. Following Dimitri's and Ralf's opening comments, we will open the line for questions. [Operator Instructions]. Dimitri, the floor is yours.

Thank you, Dave, and welcome to everybody here in this call. Nice to see you yet again, a busy week for us, busy week for you. The ANH call last Monday, now the full year results, and you've seen that there are a lot of numbers there. So Ralf will lead you through in a minute. And then next week, our integrated annual report. And as you've seen in the press release, we're also looking forward to host our investor event on March 12 about the next phase of DSM-Firmenich as a consumer company.

Now let me go through a few of the highlights of the divestment of ANH to CVC. We explained that on Monday, but it was an important piece of our journey. And I think it's clear to say that it's really focusing on DSM-Firmenich to become a key player in Nutrition, Health and Beauty. And that's also where the value creation is. So an important point was the signing of the divestment of ANH to CVC. And we constructed a deal where we have mitigated the downside risks in the ANH business as well as the volatility, one of the strategic reasons that we announced that we wanted to divest, and we have implemented on that.

Now we have created a deal structure that is not only mitigating those risks on downsides, but also creates an opportunity on upside. And that is also what we have announced last Monday, together with a favorable long-term supply agreement on vitamins. The EUR 2.2 billion, we found a fair value for the ANH business. I think it's a great business, but it has its volatility. We'll get proceeds at closing of EUR 1.2 billion and remained a 20% retained stake because we wanted to cater for a possible upside.

The solutions core business, the specialty business is a really good resilient business going forward. So that whole multiplier on value we would like to capture, as well as the Essential co, which is predominantly the vitamins business, where I think CVC Capital Partners are a partner we work on different businesses with, and they are very much catered to make that business grow and add value and want to capture that 20% as well.

Well, in the grand scheme of thing, 20% of EUR 2.2 billion is around EUR 0.5 billion. So it is also in terms of risk mitigation, not the biggest number. So please don't see the 20% is something where there's a direct link to our business, not anymore. It's deconsolidated. It has been out of our numbers. The EUR 9 billion is the DSM-Firmenich consumer scope that we're talking about.

Now the earnout, the earnout is linked to business on solutions scope, very good business. So in that sense, I think the earnout is pretty much secure. And the part of the earnout is linked to Essential core. And then if that's half of the earnout, I think it's all been mitigated with CVC working diligently to bring that business up to [ thrive ]. And I think there are lots of opportunities with normalization over the business as we speak.

Now what are we going to do with the money? Although let's make it very clear, the money only comes in towards the end of the year. As a sign of confidence, we will start our share buyback already in quarter 1 in addition to the EUR 1 billion that we have started and executed and completed for the Feed Enzyme business. And at the same time, not resetting the dividend, it remains stable also after the carve-out of ANH at 250.

Now if we then go to the next slide that shows with ANH out of the way, we are on our journey where we merged the company, we delivered on the synergies. We have tuned our portfolio, and we have signed the deal to divest ANH. We're now into the next phase of DSM-Firmenich, the consumer company, and we're going to grow what we have. We're going to anchor what we do and going to deliver on our promises. On March 12, we'll give you that accelerate route with our BU President to get a bit of a feel on what we're growing and how fast we were growing.

Under that journey, we have grown organic sales growth of 6% in '24 in the scope of DSM-Firmenich consumer related. And this year, we have announced the 3 years full year result, 3% growth on 2025 for that business in the environment we are in. So we're showing the resilience of that portfolio going forward.

Now we then go to the next slide, a little bit the financials of that DSM-Firmenich consumer scope. If you move to the next slide, I'm going to show you a few numbers. Yes, here we go. So here are the numbers. Here, you can see we're a $9 billion company. We have grown that company 3% in '25, as we said, 6% in '24, if you go through the restate apples-with-apples comparison. An adjusted EBITDA of EUR 1.7 billion, EUR 1.8 billion, which was a 5% step up like-for-like. By the way, that's the same from '23 to '24. So it shows the resilience of that portfolio that we've built.

With the trajectory of EBITDA margin, I think many of you asked the question, how do you come to the '22, '23 midterm targets? Well, we started with 18%. We moved it up to 19%, 19.6% for 2025. If you take the last 2 quarters, we're more closer to 20%. So also that trajectory will continue with a good generation of cash flow, the 10.5% conversion over sales in 2025. I already alluded on the dividend and on the share buyback and on the investor event on March 12th, where we're going to give you some insight on what the next phase of DSM-Firmenich is all about.

Now last phase, last slide before I hand over to Ralf. In that whole trajectory, we stay true to our sustainability program. If you can go to the next slide, please. Then it's clearly that we also have made quite some progress on sustainability. It's important for our customers. So some people will say, well, why do you still work on sustainability?

Well, apart from the fact that it's part of who we are, it is in the market we play in with customers important, 100% renewable ahead of plan and also some recent ratings of CDP, AA for climate and water, but also platinum metal for EcoVadis. It does matter. It is the company we're building. And we are proud that we also continued that during that merger. So we're well positioned to go into the next phase, which we call internally the accelerate phase, with growing what we have, anchor what we do and deliver. But before we go there, maybe let's look back for one more time in what we've done in 2025 before we move forward.

And with that, I hand over to Ralf.

Well, thanks, Dimitri. And good morning, everybody. Before diving into all of the numbers, every number presented is, as Dimitri said, in accounting terms, a continuing operation. It represents the company we've been building over the past 2 years. And it's all about Perfumery & Beauty, Taste, Texture & Health; and our Health, Nutrition & Care business.

As you'll see, ANH is not very much coming forward in the slides. It's now part of discontinued and the Dimitri and myself will be managing that business for cash until the closing has finalized, which we anticipate towards the end of the year. It will be positive in cash flow generation as well, and that's what we'll steer up on, and we'll continue to report on the cash performance going forward.

Now a few things. Happy with the announcement on Monday, where obviously triggered the whole event of all of the restatements and we've been releasing the new numbers on Monday afternoon. So it is a lot to take in. We appreciate that. I think also if you look at our press release, we have been as elaborate as possible, giving you the full P&L, the balance sheet and the cash flow ahead of our annual report.

In the Annex we've tried to bridge also between the total group and the continuing operations and show you all of the moving pieces. But we also appreciate that in a busy reporting season, maybe not everybody has restated it. In the Annex, on Page 21 and 22, we've basically also included a reporting as per the old world, including the divisions before restatement to accommodate you as much as possible.

Now Dave and the team are happy to take your questions. The annual report next week, that Dimitri alluded to, will also be based on continuing operations that will allow you also to all adjust to the new world and then we move from there.

Now let's dive in a bit how that new world has performed. But before we move there, I think this slide is an important one for me, where overall, you've seen the work and the outcome of all the activities around tuning of the portfolio, where on a group perspective, we've developed the group towards a 22% margin. It's very much in line with the trajectory that we envisage. But also you see the 3 BUs with P&B, TTH coming towards the lower end of our guidance, also very nice progress on those fronts. And HNC really showing a strong recovery towards that trajectory as well.

And I'm happy, although that the restatement is a lot to take in, it does show that also going into '26, we've got the right reference on how we're doing as a company.

Now let's dive in on the next page, please. Overall, the group, Dimitri already highlighted it, for full year overall 3% organic sales growth in not the easiest environment with a stronger H1 than H2, but encouraging growth throughout the year with the leverage in EBITDA, so a 5% step-up in EBITDA and has set the margin of 19.6%, very nice. But for me, it's more relevant as we're on a trajectory that the second half is at 20%. And that's something that we'll continue to improve on.

If we look at Q4 specific for the group, overall, a 2% organic growth and a 3% step-up in EBITDA and a margin very much in line with prior. But I think it's more relevant to zoom in into the business units. But before we go there, also a highlight on cash. We delivered overall, remember that when we guided for a 10% target that, that was for the group. We've delivered upon that for the total group.

So the total group was just over 10%, but also in the continuing operations, we've delivered upon that, and I'll comment that towards the end of my voice over. Another metric that I want to call out is that we talk about our capital returns. Overall, the core ROCE for continuing operations stood just over 11%, showing also the quality improvement on that front over the period.

Now let's zoom in on the next slide, please, into the businesses, starting with Perfumery & Beauty. Overall, a 3% organic sales growth. Keep in mind that throughout '25, we obviously had the headwind in sun filters, where we've seen some softer conditions. Overall, adjusting for that, the sales growth is 1% to 2% higher throughout the year.

And going into Q4, we've seen an improvement in sequential conditions with an overall 4% organic sales growth with a strong contribution of Fine Fragrance with a high single-digit growth and a more mid-single-digit growth and a more mid-single-digit growth in our Consumer Fragrance & Ingredients business, whilst the recovery in B&C did not come through yet, overall delivering a solid performance in our Perfumery & Beauty business.

Margin overall, slightly impacted by FX and the mix effect as a result of that on a full year basis, very much in line at 22% on average despite a difficult exchange rate environment.

Moving then on to the next page, please, to Taste, Texture & Health. Overall here, a very strong year. Again, 4% organic growth. Keep in mind, the comps of last year on the back of a very strong 2024, that translated again in a very nice step up in EBITDA of 7% year-over-year when adjusting for the FX. And also here, the margin is something we continue to improve margin positively, as said, towards the 21%, the lower end of the range, and we continue to progress from there.

If we look at Q4, a bit impacted by softer conditions in the U.S. mainly. Overall, a 2% organic sales growth, still reflecting the contribution of synergies and very well positioned in the market, but we see, especially with our key accounts in the U.S., a bit of weaker. Overall, if you look at it from a segment basis, beverage, a bit softer, but dairy, baking at very strong and that continues.

EBITDA quality very profound. Q4, a very nice step-up. Overall, a 10% step-up in EBITDA. And when adjusting for currencies and also the margin showed a very strong step-up versus prior, in line with the ambition that we have for this business overall.

Then moving to Health, Nutrition & Care on the next page, please. Overall there, we often talk about the journey of Health, Nutrition & Care and also that journey continued. So on a full-year basis, continued growth of around 3% organic. A continued strong performance at the EBITDA side, a 4% step-up when adjusting for currency and also the margin continues to improve.

You also see that in Q4, we again delivered a 20% margin for the business. The growth was somewhat impacted by timing of a bit more lumpy order in our pharma business. There is a bit of a shift there that overall, adjusting for that, the organic sales growth stood at 1% for the quarter, where we see a continued strong environment for Early Life Nutrition and our HMO business, but we also see the uncertain consumer behavior impacting a bit of higher dairy supplements and Eye health business in the fourth quarter.

Overall, margin more or less flat as said in Q4. But overall, a continued trajectory of growth also in Health Nutrition & Care. Maybe then last, but not least, looking at cash, overall, important on the next page, please.

Our cash performance -- sorry, before we go there, there was one more slide. I think here a lot of detail. I did want to come back on the overall performance of the group as well because I think that's important. It's a bit of a busy slide, but it's coming out of the press release. I think the key highlight here are two things.

On the one hand, our adjusted EBITDA for the group, overall will land just below EUR 2.3 billion, in line with the guidance that we gave, set aside for a bit of weakness in Animal Nutrition in the fourth quarter and a deteriorating FX environment.

Overall, we came in at EUR 22.80 billion for the total group, so very much in line from an overall perspective as well. And also on the tax side, you see that our rate is normalizing at 21% for the continuing operations where we aim to improve a bit further, I think, as relevant going forward.

Then to the next page to our cash conversion. So overall, I think looking at a few drivers. Overall, working capital was below 29%, a little up versus prior when we talked about cash and the unwind of inventory in the second half. I'm pleased to report that our second half performance was very strong. Remember that we came out with the half year numbers with a softer performance in the first half, so happy to see that rebound.

However, in the current environment, we were not able to fully absorb the uplift of inventory on the back of the tariffs and the carve-out activities that we've done. So that is to further unwind in '26 and causing us a bit of a percent in working capital.

Overall, our sales to cash conversion for the continuing operations was also well above 10%. And there, we alluded to that in the first half, a bit of a shift, where in '24, you had a bit of a benefit from some timing of payments, including incentives, which is obviously then impacting '25. So -- but across the two years, a 12% performance, and we'll come back on that in the March 12th event where we will be stretching ourselves a bit further in terms of target setting on that front. But overall, an encouraging performance. And a good momentum going into '26.

And maybe with that, Dave, we pause with the voice over and move to Q&A.

Yes. Thanks, Ralf. Indeed, it is a good moment to start with the Q&A. [Operator Instructions]. And with that, operator, we can start.

[Operator Instructions] Our first question comes from Nicola Tang with Exane BNP Paribas.

I want to start a bit with the outlook. I know you didn't give an outlook and we have to wait until 12th of March to get a bit more color. But I was wondering if you could talk a little bit about how the year has started across each of your continuing divisions. And you've given us a restatement for the past year, but is there anything to be aware of in terms of any changes in seasonality versus what we're used to for old DSM-Firmenich. I'll leave it there. Those will be my questions.

Okay. Let me respond on that. Indeed, on March 12th, we'll give the formal outlook, but I can give you a little bit of color, and then you can prepare your outlook yourself before we go on March 12th. What you can expect from us on March 12 is that we'll go a little bit to industry standards. So we'll give you a bit of a range on where we see organic sales growth, the EBITDA quality as a percentage, and obviously, the cash percentage of which you were clearly indicating, all of you, that we felt that the 10% was right, conservative. So we're going to review that and come back to you in March on that.

Well, a bit of color. What we have seen overall, before I dive in a little bit to the 3 business units and the 3 businesses. We've seen a bit of a cautious consumer behavior around the globe, but predominantly in North America, which is an impact on the Taste part of TTH and certainly dietary supplements and the eye health part in HNC. We'll come back to that in a minute when I'll give you a bit of color for BU.

I think a 3% growth of the consumer in scope business for DSM-Firmenich is a good growth in the current market context, considering also the 6% growth we've done in the same scope in 2024. Now organic sales growth, 3% if that is in this current setup, we didn't see any change in trends from Q4 into Q1. So I think you can see that Q1, certainly for now half of February, we will not see a huge change from Q4 to Q1.

We will know a little bit more in March. We'll give you the input, I think at the end of the day. A 3% in a year 2025 is a little bit the range where we've seen in a difficult market context, is what our business can bring, with a nice pipeline and growth going forward, still to the midterm target of 5% to 7%. And the BU presidents will also be there at March 12th to give you a bit of a feel of what is in the pipeline, what are the drivers?

The fundamentals of the businesses are absolutely the same. We've all seen human mankind when uncertainty is there, they will start to be a bit more cautious. And there are two things of it. They either pile the stock or they destock. Pile stock, we saw during COVID. Now we see that destocking happening and then it normalizes over time.

When it exactly will normalize, we don't know, but that normalization will take place, I think that is clear. Now, some color per business, Perfumery & Beauty. I think a good result in Fine Fragrance, high single digit. We see that continue. Mid single-digit growth in Consumer Fragrance, also there, with that trending doing well. Ingredients, for us, very good. Remember, mid single-digit growth after we've tuned the portfolio. We had a EUR 1.2 billion portfolio.

We've tuned it, made deliberate choices where we want to grow. That ingredients we have are a big part, are specialty ingredients with mid single-digit growth in Q4. And Beauty & Care, the destocking effect fading out in Q4 and moving that into 2026, where we will see normalization going on.

Now Taste, Texture & Health. Here, overall, a 2% growth in Q4, 4% for full year, with a 10% growth in the year before. So let's look a little bit about the 1 to 2 years trending with the comparison. Very good growth in pet food, in bakery and dairy. Also, dairy as a segment linked to healthy food. GLP, we really see a pickup there, a bit slow in beverages, but above all, in the North American region, that uncertainty has caused cautious behavior of consumers and therefore, also our customers, so we have seen North America being soft with destocking.

Now then Health, Nutrition & Care. Health Nutrition & Care grew 3% for the full year, minus 1% for Q4, but you have to correct for that specific pharma order, which is sometimes in 1 quarter to another, it would have grown with 1%. Also here, predominantly the North America bit Dietary Supplement and Eye Health, Early Life Nutrition, Pharma, really, really doing well with good growth also on biomedical. So the fundamentals are still there. We've shown, build on what Ralf said, a 3% growth in a difficult market is creating a bit of confidence. So we're not giving an outlook, but we are giving you a lot of color to understand where we are heading for.

Second question, Ralf?

Okay, yes. No, supplementing, I think Dimitri gave a better call. I think overall, Nicola, I think also, if you look at the Annex, then the impact of the restatement is very limited. So the regular seasonality will remain in place. Not that, that is very big, but on the back of the restatements, there's no fundamental change on that. Other than that, is that you now see the quality of the tuned portfolio.

And if you look at the overall margin, fairly stable throughout the year and also from a growth perspective, not much of a deviation. Other than that, some of the a more volatile and weaker segments have now been restated. So that generally lifted the performance a little up.

Our next question comes from Charles Eden with UBS.

My first question is more of a follow-up around sort of comments on Monday around the stranded cost of EUR 75 million that you mentioned. Would you expect this to mean that you start '27, I guess if we assume the deal closed at the end of '26, with a EUR 75 million headwind to continuing op EBITDA? Or do you expect to announce sort of another sort of top-up cost savings program to offset this amount, either fully or partially?

And then second one, I'm just kind of follow up on the '26 guidance. And can I pressure a bit on the decision not to provide the guidance today. I guess, given the initial plan was to announce last summer, you've known the scope for a while when Ralf, as you mentioned, the restatement are pretty small for the continuing ops. So I'm slightly surprised you're waiting until March to give us that outlook. It just feels like it adds another period of uncertainty for your shareholders who've been patient and waiting for the disposal. So can you just help us understand that?

Okay. Let me do the first one and then Ralf could explain the outlook. By the way, 12th of March is three weeks away. But apart from that, that's Ralf to respond.

On the stranded costs, thanks for giving me the opportunity to elaborate on that. The stranded cost will have zero effect on our EBITDA. So we will compensate it for that. We have programs ready. We know when the TSA will run out. We'll take actions before. We've done it several times with many of the divestments we've done. So the EUR 75 million will be fully compensated for that. Maybe you see some small effects from one month to another, but we have road map, a road book where we exactly know what to do and how to phase that out. So that will not have any effect on our bottom line throughout the period.

All right. And let me then comment a bit further on the guidance. The short answer was of the Dimitri, it's only three weeks away. Now but on a serious tone, Charles, it's something that we looked at as well. But as you'll appreciate, we just closed the transaction literally over the weekend and then the restatement and the announcement of the deal. Obviously, when we want to guide, we want to guide for continuing operations.

But I think also through the color that Dimitri gave is that we will be giving that guidance in full, including the BUs, but also about what is comprising of the businesseses, I think also a guidance today would kind of land in a territory where there's a lot of -- where people are still digesting all of the changes and going through. I mean, if you look at it, there's not even a consensus out there in terms of that around that new company.

But rest assured, we are managing the business for growth. You said that it adds a period of uncertainty. I don't think so. I think with the voice of Dimitri, I mean, the color that we gave is in a difficult environment in '25, how we managed to deliver at least 3% growth. We will be managing the business for growth going forward.

We will be tilting -- what Dimitri clearly said is that our guidance will be very much around organic growth, EBITDA, quality and cash where the cash target we will be uplifting, I think that is clear. And at the same time, the margin is a continued improvement story as well. We are happy with that the actions of tuning, also, if you look at the bridges that we presented at Capital Markets Day, there was a step-up of 2% of that. We have delivered on that. We're now at a 20% margin, but it's clear that we want to continue that trajectory also going into '26.

So I think overall, there is comfort around that, managing the business for growth. We continue our margin trajectory and we'll be uplifting our cash performance. But then zooming in onto the full details and everybody had time to digest also the new reality and then we'll be bringing also the BUs that can then elaborate a bit more on our growth ambitions or innovation-driven ambitions. And with that, I think then, there's more purpose of giving you the outlook then on March 12.

Appreciate the color. I guess my point would just be we're going to recalibrate consensus now. And then maybe in 3 weeks, it needs to be recalibrated again. So it just creates a netbook. Anyway. I appreciate the color.

Yes. All right.

Our next question comes from Matthew Yates with Bank of America Merrill Lynch.

A couple of questions, please. The first one on the Perfumery & Beauty business. If I take the sort of continuing operations, I think the margins were down 80 basis points year-on-year. Can you just help us disaggregate that a little bit? You know, what was the FX impact on that? You talked about negative mix, but Fine was actually growing quite well. So, I guess, the mix isn't obviously a headwind unless, you're suggesting that beauty is a very, very high margin.

And then the second question for Ralf around the cash flow. And I apologize, I'm not really sure how to phrase it because I haven't been through the accounts in a lot of detail. Your cash conversion was down about 3 percentage points year-on-year. It looks like about half of that is probably explained by working capital and then there's another half that I think, in your introductory remarks, you talked about timing.

I'm just trying to understand, you're saying you're aiming to raise the cash flow conversion target. You've just done 10.5%. Like how would you honestly assess the cash conversion last year? What -- are there things that you think was depressing that conversion that we wouldn't necessarily extrapolate going forward? Just trying to get an assessment really about how much cash the business is generating?

Yeah. You want to take P&B? I'll take the cash.

Yes. I think on P&B, it's rather clear. You basically said it's FX and it's mix. So remember that Fine Fragrance is around EUR 600 million out of the total. So obviously, we had a growth there. But Beauty & Care was lagging behind, softening, waiting for normalization. So it's a mix effect. That's about half and the other half is FX.

All right. And then building on the cash, and I appreciate the question, Matthew. Let me -- I think your assessment -- your quick assessment is a good one. So there's a few moving pieces around working capital. I commented on that in the opening words, around inventory, that we're not able to manage everything through. So we're carrying a bit about an elevated level. Inventory is about 1% differential.

Last year, we continued to make good progress. This year, whilst the efforts were there to reduce it, I think, overall, the tariff environment and our carve-out activities cost an elevated level. Obviously, with a somewhat softer demand environment in the second half. So that's about EUR 100 million and accounts for half of it.

The other moving pieces in working capital, generally on the payable side, I'm happy if you look at our DPO, it's slightly above 100. We're very much in line with prior. Receivables have been elevated as well. I think everybody is carefully managing the cash flow and that costs us a bit of half a point as well. So I think that assessment is absolutely fair.

Half is working capital, and then I'm confident that we will be able to rebound that. And that's how I am also looking more at the cash flow over the 2-year period. If you look at the continuing operations, we included that in the press release, was 13% last year, now with 10.5% now on average, that lands very much at a 12% rate over this period.

Now, what do I mean in terms of timing of payments? There's always a bit of an overflow from year-to-year. And sometimes that allows you to slightly perform better in one year, and then you see the rebounds next year. That's what we've seen. But if you go back to a half year call, I also explained that the incentives had an impact on that as well. On the one hand, '24 was a strong year, but the actual cash out is actually the year thereafter. So whilst at the same time, you have a bit of an elevated level of cash generation in '24 because you got the strong business results, but then obviously, you see a bit of a higher outflow in the first half of the year thereafter.

So I think that's why you need to balance the cash over the 2 years to really see the current earnings performance, but at the same time, we have a continued step-up that we want to do in terms of working capital, but also CapEx. If you look at it, when we gave the prior guidance was always for the full group. We guided for 6% of sales. We landed spot on, on that figure.

If you look for the continuing operations, it's slightly elevated because we're finishing the Bovaer plant, so that has, still a cash outlet this year and next year. But there's a potential that, that will normalize back to the 5% for the continuing operations, so that in itself was also 1.5% improvement. So I think we've got the levers.

We'll elaborate a bit more on that on March 12th as well on what the programs are in place and where Dimitri and myself are focusing on and steering on, but there is a potential uplift for that target, and we know where that needs to come from.

Our next question comes from Alex Sloane with Barclays Bank PLC.

Two questions from my side. First one on HNC, could you remind us roughly how much of the division ARA oil sales make up? And if you were to see significantly increased demand there from market share gains, given everything that's been happening, you know, can you talk to your capacity to service that demand and what that could potentially mean for HNC in '26?

And then just the second one, just going back to Perfumery & Beauty and Matthew's question on the margin. I mean, was there any of that margin pressure that may be related to the kind of increased price competition in perfumery ingredients that we have seen at some of your peers. I think so far, you haven't really called that out, but just wondering if you can maybe touch upon that? Are you seeing any pressure on that front? Would you expect to see any pressure on that front?

Thank you for those two questions. Let me elaborate on that. Thanks for the ingredients China part. You didn't hear us calling that out because it's not an issue for us. Now then you could do a follow-up question. Yes, but why are the others talking about it?

Because we have tuned our portfolio already 2 years ago. Remember, we had a EUR 1.2 billion ingredient portfolio, where we have made deliberate decision not to rebuild Pinova. We have sold the aroma business. We have tuned down our portfolio. We've upgraded our portfolio and we have an EUR 800 million portfolio left in the ingredients, apart from the CapEx. So that EUR 800 million is predominantly specialties, fragmented, small molecules.

And the pressure on China is on the big molecules, the menthol, the citral we were not in those big molecules because these big molecules, scale is important, cost is important, commodity type of elements are there. We don't want to play there. It's not our profile. We are in the Fragrance ingredients, in the fragmented ingredients, and therefore, you don't hear us call us out.

And if you see at the results, the ingredients grow mid-single digit, and we're very happy with that. So that's why you didn't hear us calling it out because it's not an issue for us.

Now then on your HNC part, I will be less specific because obviously, this is also a customer as well as competitive -- sensitive. We are the best-placed player in Early Life Nutrition. I think nobody would debate that. We are in ARA, we are in DHA. We now are absolutely the first entrants in HMO in China, but also more than HMOs in the pipeline to follow.

And obviously, what we have seen on ARA is helping the story we tell Early Life Nutrition. Innovation is super important. Quality is super important. Credibility and reliability is super important. And I think DSM-Firmenich is always have -- always been that type of partner for our customers. And obviously, what is happening on the Early Life Nutrition market is helping us a little bit, and we will see a little bit of tailwind for that because I think it hints to what we want to be for the Early Life Nutrition phase.

Now HMO, I spelled out earlier, that's a category where we see more than EUR 100 million-plus segment moving towards. And Early Life Nutrition, as part of our HNC business is around 25-plus percent of the portfolio. So it's definitely an area where we want to play, where innovation is important, where premiumization is important. Just to give you a bit of reference, everybody is always asking, oh, Dimitri, Early Life Nutrition is bad because birth rates are going down. The issue is that the premiumization with new ingredients is going up, the ingredients play into the Early Life Nutrition has seen very, very healthy growth in the last two, three years if you're there with the right innovation. Let me pause here.

Our next question comes from Fernand de Boer with Degroof Petercam.

Yes, I also had a question on Early Life Nutrition, but that was answered. But on the new company of the continuing operations, how much of your cost base is actually in Swiss franc?

Great question. Overall, our FX profile improved. Well, normally, you get a slide from me with the housekeeping indicating that a bit as well. I think overall, the dollar exposure came down to about [ $13 million ] , that was previously closer to [ $15 million, $16 million ]. So that has somewhat improved. And on the Swiss franc, our overall exposure was CHF 800 million, it's now CHF 600 million exposure. Overall, the impact of [indiscernible] is about CHF 6 million, I think that was previously CHF 8 million. So somewhat improved profile on the FX side. Obviously, the current environment is not very helpful. So we will see an impact of that. But overall, the sensitivity has improved with the separation of ANH.

And maybe to come back on the guidance question. The fact that you don't give a guidance today for '26, absolutely does not mean that you are going to change your midterm guidance of ambitions?

The answer is for 2, yes, and for 3, no. OSG, no change midterm. EBITDA, no change, midterm. And you wanted us to change the midterm guidance on cash because we said above 10%. And we got so much comment that, that was absolutely conservative, et cetera, and Ralf and myself, said listen, we are also building a company, so we start with more than 10%. And I think during that event, I also asked for a little bit of patience.

Now, we have delivered 2x above the 10%. And I think I've heard Ralf saying that we would upward adjust that cash target. But let's have that for March 12. So 2 out of 3, absolutely, yes. And the third one, a yes, but it will be changed upward.

Midterm still the starting point is '24?

The midterm starting point in '24...

Because actually in 2022 you gave the guidance for midterm and then in '24, you did actually the same for a smaller company, but not that you now mean with midterm, okay, we're going to have midterm targets, and then the starting point is '26.

No, because we're already in '26. By the way, we've always said a midterm target starting run rate into '28. So that is what we said and that's still consistent. It's not a moving target. Yes, it's not like my son saying, I will pass my exam, but not this year, but next year.

Okay.

You don't sound very convinced.

Well, what I said, we had '22 and then it was midterm and then in '24, it was also still midterm, and that's why I'm asking that -- okay, the answer is very clear, thank you.

Yes. '22, the company didn't exist as we are today. So we started in May '23, that is...

Our next question comes from Chetan Udeshi with JPMorgan Securities.

I have two. The first one is quick. Is there any implications on your tax rate, excluding animal? I mean, I suppose animal wasn't making much money anyway. So -- I would guess, but just to clarify, the second question is your cash target, and I appreciate you'll probably upgrade that conversion target, which is good to see. But it's based on your adjusted numbers. And I'm just curious, as we go past this phase of restructuring and separation. What is the level of APM that we should have in mind that sort of leaks out from your adjusted cash?

Because when I look at what you give us in terms of adjusted free cash flow versus what we can derive just taking your cash flow statement, the numbers are pretty different, and I would hope, over time, that gap reduces. So I'm just curious what would be the normal level of APM that we should have in mind?

Yes. Thanks for questions, Chetan. So on the tax side, overall, I made a quick comment in the opening statements. So overall, our effective tax rate for the continuing operations is at 21%. I think previously we guided for 21% to 22% for the total group. Happy that we came in on 21%, and we continue to aspire to minimize the leakage on that front, but this is very much in line with the guidance that we gave before. So the impact of the separation of ANH despite having, of course, its base in Switzerland didn't adversely impact the company, which is good.

And again, I think that's also going to be the guidance going forward, in that same range that the tax will be around that 21% level. Now then, with respect to your APM questions. I think in the Annexes of the press release, you can actually see the APM development as well. Now obviously, throughout these tuning activities, you're rightly so, we had a bit of leakage. And normally, when you transform, there is a bit of a cost associated to that. We took that into account in the company that we want to build.

But over time, from a cash perspective, you see it coming down. It's a constant point of attention, also for Dimitri and myself, we don't want any leakage on that front. We have substantially reduced it over the years from '23 to '24 to '25 also with some of the merger costs flowing out. And the guidance for '26 is that it should come down to below EUR 100 million, but we continue to stay focused on it to reduce it as much as we can. So the adjusted number comes closer and closer to the nonadjusted figure.

We're now at the end, I think we are at the end of the Q&A session. Maybe closing remark, Dimitri, you want to make?

No. Thanks, Dave. Indeed. Thanks for your time. Thanks for your understanding. Let's dive into the numbers. Please reach out to IR to really understand. I understand there's a little bit of pushback why we don't give an outlook. Now, you need to establish a full understanding of the base before you give an outlook.

Imagine we've given an outlook, you would have asked based on what? So let's do step 1 first, March 12 is around the corner. We gave color on the business. I think at 3% in a difficult year. That's what we inspire to. So even to the midterm target, when business is normalizing, is absolutely in play with an EBITDA trajectory starting from 18% to 19%, close to 20% and we will not stop after 20%, we move towards the 20% to 23%. And I think with the cash we clearly indicated that we'll listen to you and that we'll come with a new midterm target on the cash as well as in the outlook for 2026.

Now with all that, over the last 2.5 years, I think we worked diligently to bring DSM-Firmenich into the next phase, a EUR 9 billion business with today already at 20 -- around 20% EBITDA with good cash flow generation. To the point on what's a normalized APM is also linked to what is the next phase? The next phase will be accelerated. We will not go for big M&A, we're going to grow what we have.

So we're happy with that portfolio. We're going to show that potential with an improved step-up still from the EBITDA from 20% to the range of 22% to 23% with good cash flow generation and with a clear understanding for our investors. We have paid around EUR 2 billion of dividend over the last 2 years. It is important to us. If we have additional leverage on the balance sheet, we are doing share buybacks. We finished the EUR 1 billion.

We'll add another EUR 0.5 billion already in anticipation of the close towards the end of the year. So we also take that very seriously, and I hope we all see you on March 12 to show that what we have built has huge acceleration potential. And with that, let's close the call.

Okay. Thank you, Dimitri. Thank you all for attending today's call. And with that, we can close the webcast. Any questions, as the gentleman already said, make times, please reach out to Investor Relations. We will pull a consensus ahead of 12th March, so that also we will then give basically an outlook on basis of that you've referenced to your estimates.

Back to the operator, please.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good morning, and thank you for joining today's call on such a short notice. I'm sitting here with Dimitri de Vreeze, our CEO; and Ralf Schmeitz, our CFO. This morning, we published the press release with the announcement of the divestment of Animal Nutrition & Health to CVC Partners. You can find this press release on our website. You can also find our disclaimers about forward-looking statements.

Following Dimitri's and Ralf's opening comments, we will open the line for questions. We've scheduled this call for half an hour. Importantly, and as a reminder, sell-side analysts who want to ask questions will need to register via the questionnaire's link, which they can find on our website in the financial calendar. And with that, we're ready to go, Dimitri.

Yes. Thank you, Rolf. And indeed, welcome on this short notice. You've seen -- I am wearing special tie for you for, I think, an important milestone in the journey of DSM-Firmenich. If we go to the next slide, I want to give you a little bit of background on the transaction we've done. I will use the word smart transaction that enables us to create fully focused Nutrition, Health and Beauty consumer company for DSM-Firmenich with the exit from ANH. And that includes the Aroma Ingredients, which were in the Perfumery & Beauty before. .

The deal transaction represents a fair value of EUR 2.2 billion, with proceeds at closing of EUR 1.2 billion with a 20% retained stake in the company with an earnout possibility of EUR 0.5 billion. Alongside that deal, we secured a long-term vitamin supply agreement for these DSM-Firmenich at favorable conditions. So it also helps our human part of the focused consumer company. And ANH will be split in 2 stand-alone entities, one around the Solutions Company and one around the essential products, predominantly the vitamins. The target of completion is around the end of 2026.

Now if we then go to the next slide, a few elements on valuation. If you take the EUR 2.2 billion, this is around 7x EV over adjusted EBITDA multiple. And if you take into account the earlier announced Feed Enzyme sale last year, it is a EUR 3.7 billion, and that remains to have a 10x multiple.

Capital allocation. Important to know that we have discussed our dividend. We will not reset the dividend. It will be EUR 250 million as we proposed and the EUR 250 million remains the stable dividend for the DSM-Firmenich, a core part, so the consumer part of the company after the ANH divestment will come to a close towards the end of the year. At the same time, we will start a share buyback for EUR 500 million, EUR 0.5 billion, in addition to the EUR 1 billion in 2025.

Let's go to the next slide, which you have seen many, many times. That is our journey. We've done the merge, delivered on the integration. We've announced a focused company on the consumer part with separating Animal Nutrition & Health that we announced today. We have prioritized our portfolio, and we're now ready as DSM-Firmenich as a consumer-focused company for what we call the accelerate phase. What can you expect from us in the coming period? So we go to the next slide.

Today, we will -- somewhere midday, we will launch the restated financials so that you can follow the DSM-Firmenich consumer part of our business with ANH being divested. We will have, on February 12, our full year results. So hopefully, we'll see you back on Thursday, where we focus on 2025. And then you are all invited for our investor event, where we look forward for our next phase, our accelerate phase of the DSM-Firmenich consumer company on March 12, 2026 in London. And with that, for a little bit more color on the financials, handing over to Ralf.

Yes. Thanks, and good morning, everyone, also from my side and happy to be with you this morning discussing the closure of the transaction. On the next page, please, a couple of details. I'm sure there will be a few questions around the EV to equity bridge, and we've captured everything in the press release that went out this morning, but let me address a couple of highlights. So overall, we expect proceeds at closing of around EUR 1.2 billion, starting from an enterprise value of EUR 2.2 billion as Dimitri quoted this morning.

Now if we deduct the earnout and the net debt in the EV to equity bridge that takes you just to below EUR 1 billion, which is then translated. We're selling 80%. We're retaining 20% to benefit from the upside of both companies. So that translates into a EUR 0.6 billion net cash proceeds, and of the net debt deducted also in the EV to equity bridge will get a large part back at closing through the transfer of debt that is currently in the Animal Nutrition & Health entities as well as the transfer of the pension and employee liabilities, which will create headroom space for DSM families going forward.

In addition, we're providing a bridge funding to the solutions company to set it up. It's a wide structure of entities and that requires some setup at the beginning, and we'll be funding that and that will be redeemed shortly after closing. So all in all, adding up to the EUR 1.2 billion at closing.

Now in the press release, there's also a few additional elements introduced. So there is also a backup financing support to the Essential Products Company, the Vitamin Company, where DSM-Firmenich will provide a loan facility up to EUR 450 million. Now that is subject to certain liquidity thresholds in the company. So it's a result when needed, then DSM-Firmenich will provide that, and there's an additional liquidity package available that is provided by both shareholders, so DSM-Firmenich and CVC Capital to the Vitamin Company.

Then on the next page, what does that -- what else? So we will be showing you today the impact on the group. Obviously, the teams have been processing all the insights of the transaction over the last couple of days. We'll be launching that shortly after this call, where we will be restating the DSM-Firmenich financials. We will split it in continuing and discontinuing operations, and to facilitate you, we're not only separating the Animal Nutrition & Health transaction, but we're also backward adjusting the numbers for the tune activities that Dimitri highlighted earlier that we've concluded as well, where we adjust for the [indiscernible], the marine lipid transactions and the like, to really show the numbers on a like-for-like basis and show you also the company that we've been created with all these tuning and the sale of Animal Nutrition & Health.

As said, they will be launched throughout the day, and Dave and the team is happy to answer any questions around that. Now the transaction resulted in a noncash impairment of around EUR 1.9 billion. Now that's before tax, and at the same time, it excludes a sizable translation gain, a few hundred millions, but that's something we can only recognize at closing of the transaction, which is expected by the end of the year and obviously excludes the book result that we actually reported on the sale of the Feed Enzymes business to Novonesis. Now the net of that represents more or less the goodwill and intangibles allocated with the merger. And again, it's a noncash impairment that we will be processing in our 2025 full year results.

In terms of capital allocation, we are leveraging the balance sheet today whilst we expect proceeds only at the end of the year. We're starting a share buyback following the result of our full year results. So that will start in Q1 2026 and will be completed throughout the months thereafter. The dividend is maintained. It's stable to preferably rising. We're changing the policy. We were coming from a distribution of 40% to 60% of our earnings, but also reflecting the confidence in our cash generation and earnings potential of the company that we've created. We are maintaining the dividend of EUR 250 million going forward also for the new company.

Now with that, I can talk on a bit more, but let's open the floor for Q&A, Dave, and see what questions are out there and happy to take them.

Yes. That's a good plan. As I already said at the beginning of this call, that the sell-side analysts who want to ask questions in the Q&A session should have registered via questionnaire's link, which you can find on the website in the financial calendar. And with that, basically, I suggest we start, operator.

[Operator Instructions] Our first question comes from Nicola Tang at BNP Paribas.

Two questions. I was wondering if you could share any more details in terms of the conditions of the earnout? And secondly, could you give any color as to the rationale to have the 2 stand-alone companies, Solutions and Essentials? And does it mean in terms of exiting that remaining 20% stake in the future, those may end up being 2 separate transactions at different times. And maybe to add on to that, I'm not sure if you would give any color here, but any color on the valuation of those 2 companies within the total EUR 2.2 billion of EV? .

No, happy to take them, and thanks for joining this morning. So with respect to the earnout, so the earnout split in 2. So we have an earnout on the overall transaction and an earnout on the exit of the vitamin unit. It's obviously linked to the future performance of those businesses as customary in a transaction like these. But it allows us to benefit from the upside that we see in both of the business, and will be realized. Now I think all your 3 questions are linked in one.

Now we haven't agreed on a split in terms of valuation for the group. We have been transacting as one but it's clear that both companies are on a different path where solutions is very well placed as the leader in the market that can continue to grow and accelerate the growth, whilst at the same time, the essential company is navigating through the current environment and by splitting them following also the dynamics that unfolded throughout this process with a fairly volatile vitamin environment, you are better suited by basically splitting the 2 companies where, on the one hand, you can accelerate the growth of the solutions company whilst at the same time, optimizing the essential product company. And for that, the separation is something that we will be organizing that, and I think that both companies are set to perform well in the future. .

Maybe just to add on that, Nicola, I think you know that within ANH, we already report internally according to these 2 segments, which are called Essential Co and Solution Co. So in terms of mindset, in terms of business model, it's a very natural evolution of it. And I think with the signing of the deal, we even make that more formal than what we have internally done. So I think that's the background.

Was there a question on the earnout.

I think there was one question to complete, Nicola, in terms of could both exits be at a separate time? The answer is yes. So we will be formalizing and separating the companies fully and there's no linking on exiting in combination. So both companies will be making their own choice and their own path around that.

Operator, next question please.

Our next question comes from Alexander Sloane with Barclays.

The first one, just in terms of the dividend, obviously, unchanged at EUR 2.5 million to start with. Could you give us an indication of where you would see the initial earnings cover on that dividend? And maybe how long it would take to get back to the midpoint coverage of 50%? And then the second one, just in terms of the buyback, could you maybe give a bit more color on why you've only gone for a EUR 0.5 billion buyback? Obviously, you did slightly higher after the divestments of the Feed Enzymes Alliance and Novonesis.

Shall I take dividend and you do buyback. Around the dividend and thanks, Alex, for the questions. So I think it clearly represents the confidence that we have in terms of growing into the dividend. As you know, we've been at an elevated level for the last 2 to 3 years, also knowing that a dividend is an important anchor stone in our capital allocation policy. Now we will be slightly above the guidance. Our initial guidance was 40% to 60%. We will be somewhat above for the full year, but in a relatively short period of time, we should be back within that range and comfortably within that range without giving you a specific guidance on the net income for the next 2 years, but I think it radiates the confidence that we have to be within that range.

But to avoid a conversation every analyst call on saying, how do you look at dividend and the like, Dimitri and myself recommended to the Board that we also changed the policy, and they were fully behind that, that we have a stable to preferably rising policy going forward. .

Yes, let's couple that with the share buyback. And obviously, this -- I think message on dividend is showing the confidence we see in the cash flow generation of the company, the consumer company that we've built. Secondly, to the share buyback, I mean, remember, we just executed the EUR 1 billion. We had the EUR 500 million to it, although the closing is still only until the end of the year. So we are leveraging our balance sheet, and it also shows confidence on the cash flow generation as such. So I do think that the EUR 500 million is mirroring that and that's also where Ralf and I really stand for.

So overall, I think we've always said that we will leverage the balance sheet. You know our capital allocation priorities, first of all, grow our business. Well, we're going to have our 2025 full year results in Thursday, and I hope that you also see the 12th March to look forward to where the growth will be for DSM-Firmenich. And secondly, we've always said that dividend is important for us and our investors and shareholders. I hope you see that confidence by not resetting the dividend, but start with EUR 250 million with a stable, preferably rising.

Then thirdly, on our M&A, you've heard me say several times that we will accelerate and grow what we have. So no big M&As to be expected. We really want to accelerate what we have built. And then fourthly, if the balance sheet leaves that opportunity, we will go for share buyback. And I think we will -- with the announcement of EUR 500 million, that is very consistent over the years. And I think this is another proof of that we are really executing according to our capital allocation.

With that, maybe next to the next question. .

Our next question comes from Charles Eden with UBS.

Just 2 for me, please. Firstly, is there any agreement on a sort of backstop date that DSM-Firmenich will be able to fully exit the 20% stakes in both businesses? Or is that subject to negotiation between yourselves and CDC?

And then the second question, just on the supply agreement for vitamins, how would the pricing work? Is it spot plus for that between DSM and the Essential Products?

I'll take the first one, Charles. Thanks for the questions. So the short answer is there's no such agreement. So we're partnering in this. We have a 20% stake, and we will exit together with CVC. Now as said on the question of Nicola, both companies might be on a different path and a different timing. We typically know the duration a CVC holds the stake, and we will be lifting on the back of that. At the same time, it gives us a good opportunity to take a benefit from the developments and the improvements in both businesses going forward.

And then on the vitamin supply, so you hear me clearly say favorable conditions. So you always remember that we wanted to divest ANH to mitigate the volatility. I think we have done that by this deal, but also mitigate any volatility for DSM-Firmenich as a consumer company. And the vitamin supply is done in a favorable condition, so more into the cost-plus area than anything else. But more importantly is you remember that with these assets, which are capital intense, you also have an idle component. So the moment that the market goes down, you have an idle cost, that is no longer part of the equation either. That is part of the new company and goes along with it. So I think we clearly have indicated a favorable supply condition.

Secondly, remember just for you, to understand the vitamins in the human space is a completely different area. There is regulatory approval. There are quality approvals. It's a different business model. If you supply to medical nutrition, to pharma, it's a different story at good margins as well. So we're very happy with that supply agreement as being part of the deal. It has always been one of our prerequisites on the deal that we secure a favorable supply for the DSM-Firmenich core as a consumer come.

And can I just sneak a quick follow-up in. Are CVC putting any capital into the transaction. I didn't see it in the release, but I don't know if there's -- if that's being disclosed. So if you could just help us.

Yes. No, happy to follow up on that as well, Charles. So both companies will make sure that there's sufficient liquidity and also CVC is putting a few hundred million in the company distributed over both entities.

Congrats on getting this over the line.

Our next question comes from Matthew Yates with Bank of America. .

So I've got 2. One is a clarification. The EUR 450 million loan facility, just to hear correctly, you're describing that as a bridge facility? So you would assume the owners would have more permanent capital in place fairly quickly after closing? And then my second question, I think it was Nicola who asked earlier, just on the earnout, can you elaborate a little bit? Because it's very hard from the outside for your shareholders to know whether they should give credit to that EUR 500 million earnout or not, if we don't know the conditions under which the business has to hit for it to be realized. So can you give us a sort of idea whether you would say mid-cycle normalized or any sort of year for reference, the sort of level of profitability the business has to be delivering to hit that earnout?

Let me start with the loan and then Dimitri, maybe you want to say a few words on the earn-out. So the loan is provided, as said, under conditions. Obviously, the liquidity in the companies has to drop below a certain threshold. Now we are providing that facility to also allow the essential company to navigate the current environment without being bothered by tight and restricted and expensive funding. Now the loan comes at -- it covers our cost of capital. So it comes at good conditions, and then basically also trumps the equity investment in the company. So it has priority over that. So we'll get that money back out of the transaction.

As building and also Charles question, there will be a good level of equity funding in both of the entities. And to your point, the entities will pursue alternative financing as well. So merrily, we also said we provide the facility. But obviously, there's more ways of funding the group, starting with the equity and obviously, alternative financing programs by the banks in the Essential Product company.

And to give you some color on the earnout, this is an earnout on the Solutions Co and an earnout on the Essential Co. So it's clearly that this earnout is something where we feel comfortable about. Otherwise, we would have not indicated the EUR 500 million. On the Solutions Co, that is, I think, pretty much good. That's a business that is doing very well. And I think we feel very comfortable there. On the Essential Co, it's the vitamins. Obviously, we assume a normalization of the market. And I think that is fair to say.

Now we've always seen normalization of markets with ups and downs. I mean you have been with us on that ride. Well, after closing this deal, that ride will be gone because that will be part of the new company, but some normalizations -- normalization on the vitamins need to happen for that payout. But if we've seen over the last 10 years, we feel pretty comfortable that, that will happen.

Our next question comes from Martin Roediger from Kepler Cheuvreux.

I have 3 questions, please. Number one, what was the book value of Animal Nutrition as of 2024 before the EUR 1.9 billion impairment today? Secondly, you say that the closing of the deal is expected for the end of 2026, subject to regulatory approvals, finalization of employee consultant processes and the creation of 2 stand-alone businesses, what of these 3 items take so long? I asked that question because antitrust issues should be a no-brainer, correct?

And thirdly, you mentioned in your press release that this 7x EV EBITDA multiple based on underlying normalized earnings. Over which time frame did you calculate that 7x multiple?

You do the book value and on which multiple, and I will do the next question.

All right. Book value. Thanks for questions, Martin. So book value of the assets was around EUR 4 billion. That's also where you see the EUR 2.2 million resulting in the EUR 1.9 billion. And as said, I mean, part of it, we realized throughout the transaction with Novo, resulting in the book profit, but the majority of the impairment is really linked to the intangibles that also were added to the book value throughout the merger and some of the remaining intangibles of some of the acquisitions from the past in M&A.

And then around the EV multiple, if you look at it, I mean, overall, the Animal Nutrition & Health. And again, you'll see the restated figures with the outlook or the restated quarters, if you like, for the last 4 quarters of all of the businesses, also pre-restatement and restated. Then if you look at the earnings potential of the businesses that are divested, that is around the EUR 300 million.

At the same time, if you look at what the consensus outlook is, let me give away the results before Thursday. Otherwise, I am then in trouble. But if you look at the consensus also on the ANH transaction prior to that, and if you then adjust for the vitamin impact, the EUR 125 million, we also have to adjust for the fact that the Novo, the sale of the Feed Enzymes business, only materials half year. So you need to adjust for that, but also for the current environment of vitamins.

And if you translate that, you get to around EUR 300 million that gives you that 7x multiple, which is a fact also, I think, the consensus for '26. So along 3 angles, you all the time get to a bit of that same figure, but that's how we got to the 7x. And then if you add the transaction with Novonesis overall, we realizes a 10x more.

All right. And then I think on the closing, you're absolutely right. You read it well indeed. So on regulatory, we don't expect any issues in this transaction to CVC. Then on Works Council, let me not speak on their behalf, but I think we clearly set out the 2 companies for the future. And then thirdly, and that's why the timing is still the end of the year. We need to create 2 fully operational stand-alone entities with all the details bits and pieces. I mean, we obviously already started with that. It was part of what we wanted to do as a strategy. But obviously, you need to do that in full accuracy.

So we'll take the time to do that, and we need the time, also to create these fully stand-alone companies towards the end of the year. So if we can do it earlier, okay, you will hear from us, but you know that I've learned certainly with creating stand-alone companies, you just need to take your time to go through, and we want to do that and therefore, closing expected towards the end of the year.

Our next question comes from Georgina Fraser with Goldman Sachs.

Hopefully, you can hear me well. I've got 2 questions left. One of them is the pro forma that we should receive a bit later today, will that reflect terms that are similar to the supply agreement that you have with CVC going forward? Or would there be any material changes between historical and what to expect coming next?

And then second question is, did you seek alternative financing routes for the liquidity that you're providing to the divestment? And if so, can you talk about what those financing conditions look like at the moment for these types of assets?

Yes. No, happy to take that. Thanks for that. No. What we've done with the restatement is actually to reflect also the commercial agreements that are in place to make sure that the numbers that we will provide for '24 and '25 are comparable and adjusted for everything. So in a nutshell, we're moving the Aroma Ingredients in we're taking Bovaer and Veramaris back in. We're adjusting for the new reality of the agreement, reflecting the profitability of HNC as well. That's why you see the continued trajectory on a quarterly basis, and we'll provide those restatements up until the third quarter. So there won't be any further adjustments backward-looking or comparison to any transaction when we discuss our 2026 results going forward.

Then maybe on alternative financing. Now obviously, our partner, CVC is clearly in the lead there. They already have certain arrangements in place and are looking at that as well, where you typically do financing in these kind of transactions is also asset-backed lending, where you obviously look at the overall assets that are available, both your fixed assets but also your working capital. So these are the programs and structures, partially already in place and partially being worked on, and that is something that will materialize further throughout the time to closing and will be fully in place at closing. And obviously, that will support the overall liquidity of the companies.

Our next question comes from Chetan Udeshi with JPMorgan.

I have 2 clarifications. One is, can you confirm that EUR 200 million of separation costs and tax, whether that's part of your EUR 600 million net cash proceeds? Or will that be -- do we need to subtract that from the EUR 600 million. That's first.

Second, with these sort of transactions, at least my history is there's always some sort of cost -- synergies and you might have some transitional agreement for a period of time. I guess the question is, is there some leakage on top, whether it's for the restructuring of your group employee cost base to reflect the lower or smaller company or just in terms of how much costs will fall back to core DSM-Firmenich from ANH cost base?

Great questions. I'll take the cost. You'll take the stranded leakage conversation. So overall, the cost is not included, Chetan, so what we expect is around EUR 150 million that is still to come. Now partially still separation costs as we need to navigate through that in 2026. Now a good part of that is tax and tax will only materialize over time, but expect around EUR 150 million cash out in '26 to be conservative. So that's what we've baked in. But it's not included in the EV to equity today.

And then maybe on the -- I think if I understood well on the stranded costs. So I mean, we've done many of these deals. We've always make sure that these stranded costs will be mitigated. We also have a plan to do that here. It's around EUR 75 million. Remember, part of that has been already been part of the carve-out where people go with the Animal Nutrition organization. We also have SLAs and TSAs for a period to transition, and we have a plan that nicely covers that overall. So net-net, there will be no hanging or stranded cost, if you may say so. So we've done that before and we have some time to do that in the transition period. So no, there will be no negative effect on what we call the stranded cost. .

So you see that also if you look at the financials, and I know you always have a close look at that, you see the sales of corporate going down, which has affected the running out of all the TSAs from the former materials one, and you don't see an adverse effect in that line either. So I think we've got a good track record, as Dimitri said, [indiscernible].

We have one last person to ask questions and then we have to close the call. So operator, can you give us the last question?

Your final question comes from Lisa De Neve with Morgan Stanley.

So you've announced the EUR 500 million buyback today and a new dividend policy. But how should we think more broadly about your capital allocation from here? Can you give an indication on how we should think about CapEx intensity with ANH now falling out of the P&L? And how you think about special returns more holistically -- especially in the light of your EUR 1 billion buyback last year? That's my first question. And secondly, do you remain committed to your core midterm strategic targets on the core divisions being 5% to 7% like-for-like and so forth? .

Yes. Thanks for those questions. I love that because it's about the future. So indeed, you've heard me say about the capital allocation, it didn't change our business, then dividend, then M&A and then share buybacks. So that has not changed. Obviously, with the capital intensity going with ANH, more with ANH than with the consumer part, you will see that our CapEx over sales will move more towards 5% after we have normalized CapEx. You also remember that we have some additional investment going forward, but we will give you a little bit more insight on that during March 12. Remember that the midterm target on growth and the EBITDA quality we always committed to, and I still remember 2 years ago, you were all not very impressed by our cash flow target where it was above 10%. And we basically said, listen, after the deal with ANH, we will review that. So let me not cover that, but cover that on March 12, but we are reviewing that cash target nicely in consistent with what we said before.

Then I think your second question was around that. Correct? Did I answer all of those in one go, just to check.

Yes. Maybe just more broadly on your special return targets more structurally? And then secondly, are your midterm strategic targets on the core divisions.

Yes. So on the core division, nothing has changed because ANH was part of that. So no changes there. So the only midterm target what we are reviewing is cash.

And maybe then also take the opportunity to wrap up closely because what I think -- and that was not coming out in the questions, what I think is important to understand is the following. This is a smart deal. This is a smart deal because it represents fair value. And you could debate whether you find a high or low. I think it's a fair value for the business that we're selling. This deal mitigates the downside on the business. So we have made the deal that we basically, as of now, no longer hit by the volatility of that business, and we have mitigated the downside. You've also seen that if there's upward in this business, we've taken the 20% stake and the earnout. We leave the door open if there will be upwards going forward. And I think that is an important part of the deal.

Secondly, we have favorable condition on the vitamin supply. So towards Health Nutrition & Care, and that helps us in the DSM-Firmenich core part. And last but not least, this deal now opens our accelerated phase. So we grow what we have. We anchor what we do and we deliver as you just said, on the midterm targets with the cash to be reviewed. So I think on March 12, we will show you a little bit on the businesses. Our BU presidents will also be there for the future. But before we do that, I'm hoping to still see you on Thursday with the full year results on 2025. And with that, I'm giving back to Dave.

Thank you. So that's it for today. But as the gentleman already said earlier, in a few days, we are already back with our full year results release on Thursday, the 12th of February. By the way, the preliminary restate we published today is about the first 3 quarters of 2025. So you won't find preliminary figures of 2025. That is on coming Thursday.

Thank you all for attending today's call. And with that, we conclude today's webcast.

Good morning, and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO; and Ralf Schmeitz, our CFO. This morning, we published our third quarter trading update, together with a presentation to investors, which you can find on our website. Here you can also find our disclaimers about forward-looking statements. Importantly, and as a reminder, sell-side analysts who want to ask questions in the Q&A section of this call will need to register via the questionnaire link, which they can find on our website in the Financial Calendar.

And with that out of the way, let's start Dimitri.

Yes. Thank you, Dave, and indeed, welcome to everybody, and we appreciate you all dialing in this busy morning for you. DSM-Firmenich delivered a solid 2% organic sales growth in the quarter against a high prior year comparison and that all in this current macroeconomic environment. The quarter started well in July, very much in line with previous quarters. But from August onwards, the macro environment began to shift. Sentiment changed driven by geopolitical tensions, tariffs and currency movements. And naturally, that made some of our customers a bit more cautious in their behavior, and we've seen reduced visibility going forward.

However, on a positive note, end-use data and retail data remains strong. So we shouldn't extrapolate too far ahead. We need to see how this plays out. The good news is that our key strategic end markets -- strategic end markets continue to demonstrate very strong fundamentals and those favorable megatrends, which will be explained about in Nutrition, Health and Beauty, continue to support us and bringing us in a very strong position going forward.

In this current environment, we continue to perform well in the third quarter. We delivered a solid organic sales growth against these tough prior year comps, but with a strong 10% step-up of adjusted EBITDA on a comparable net basis, meaning adjusted for FX and the divestments we have done.

Our core business units, the consumer-focused ones, continue to perform well and had an adjusted EBITDA margin nicely improving on that trajectory, nicely improving to 20%.

Maybe -- yes, exactly. Can the operator move the slides?

That would be nice, yes. You see the numbers also in the press release. So during that quarter, we advanced strongly on our strategic plan, remain firmly on track to deliver the merger synergies. Ralf will talk to you about that a little bit more around the cost and revenue as well as our self-help programs.

And importantly, the success of our vitamin transformation program is even clear, even in a quarter where vitamin prices receded, which brings me with a nice bridge to our outlook. And if you go through the outlook slide, maybe next slide. Here, you see the outlook for 2025. For the full year, we now expect an adjusted EBITDA of around EUR 2.3 billion. And this reflects the estimated full year EUR 90 million negative foreign exchange effect and a EUR 50 million lower contribution from vitamins, less than previously expected.

And let me explain. In respect to the FX, when we spoke back in July, our full year outlook included a EUR 25 million FX impact. We had that in Q2. And we've seen that FX currency has worsened further. And we mentioned that risk in Q2, and it now became a persistent headwind in 2025, and therefore, we have included it in our outlook.

On top of that, vitamin prices fell faster than we expected during the quarter. So instead of seeing another EUR 25 million positive benefit in the second half from the special vitamin effect, we won't have any special effect anymore in the second half. In fact, the current volatility with customers temporarily deferring vitamin orders anticipating on lower prices also means that we expect a negative EUR 25 million effect from vitamins in Q4.

It's important to note that the updated outlook is driven by external factors, while our underlying business is delivering a solid performance in today's macroeconomic situation. To put this into perspective, we expect to deliver more than a EUR 300 million step-up correcting for FX and investments, and you do see that here on that slide. And that means that the adjusted EBITDA increases from about EUR 2 billion to EUR 2.3 billion in 2025.

And before I hand over to Ralf for a bit more color, a few words on the Animal Nutrition & Health exit. While the process is taking longer than initially anticipated, we remain committed to bring this process to a conclusion in the fourth quarter, and we will only communicate when we have something to communicate. And I hope you appreciate that.

And with that, over to you, Ralf.

Well, thanks. Good morning, everybody, from my side as well. Always good to be with you on a day -- on the announcement. On a bit of a lighter note, today is Dave's birthday as well. I hope I'm not crossing any privacy here, Dave, but people will be nice to you on the back of that.

But let's zoom into the financials, starting a bit with the group. Overall, we delivered a 2% organic growth in the quarter, and that translated into a nice step-up in EBITDA performance. When adjusting for the FX and the divestments, the divestment has a sizable impact given the fact that we sold the feed enzymes to Novonesis, but also the divestments in both TTH and HNC, and I'll comment on that when we get to the BU pages.

If you adjust for that, a nice step-up in the quarter of around 10%. It's consistent with what we have seen throughout the year, and it nicely fits to the comment Dimitri made earlier, where we see a good step-up in our business on the back of self-help. Program contributed nicely again in the quarter. We have some numbers around that in both in the PTI, where we also show the Q3 year-to-date. I'll zoom in predominantly on the Q3 and in the press release as well. Overall, programs have contributed a little over EUR 150 million in Q3 year-to-date, which is nicely in line with the commitment at the beginning of the year.

Margins continue to improve as well. However, Dimitri and myself are steering more on the margin, what we call of the core activities, the group, excluding ANH, that delivered a nice 20% margin in the third quarter and is nicely in line with the growth trajectory that we're managing towards the 22% margin for the group.

If you look at it from a growth perspective, overall, you see 2% growth driven by prices. I think here, it's important to look at the dynamic per BU where we've seen a solid volume growth in the key strategic segments, Perfumery & Beauty, TTH and HNC. The volume was negative in ANH, and I'll give a bit of color on that around the vitamins there.

And allow me also to make a comment on cash. It's not on the page, but we delivered a strong cash performance in the third quarter. Overall, we had a step-up of well over 10% compared to Q3 last year. That brings the quarter to -- or the full year-to-date, sorry, to a little under EUR 700 million, and we expect a continued strong performance in the fourth quarter as well as we focus on cash.

Let's then zoom in into the businesses on the next page, starting with Perfumery & Beauty.

So to the next page, please, operator.

And then if you look at Perfumery & Beauty.

The next page is another page, no? Let's say that Perfumery & Beauty page.

Yes. There we are. Very good, then we're speaking to the same page online. So overall, Perfumery & Beauty, keep in mind the comps of last year, where we had an 11% volume growth in Perfumery & Beauty, delivered a solid step-up of 2% in the quarter. Where Perfumery continued to perform well, overall, a 4% organic growth on the back of continued strong dynamics in Fine Fragrance that delivered overall a high single-digit performance in the quarter. A solid performance in Consumer Fragrance, where we did see some softer demand from our global accounts. You heard Dimitri talk about a bit of the cautiousness. We see that predominantly with the global and key accounts across our businesses. So we've witnessed that here as well.

And Ingredients actually continued to perform well as we've seen throughout the year. Overall, Perfumery & Beauty is impacted by Beauty & Care that remained soft in the third quarter. Whilst we've seen the effects of the EU filters fade out in line with the guidance that we gave before, we didn't see the business pick up yet. So hence, overall, a bit of softness. And we also had a lower Aroma in the quarter on the back of a force majeure at a supplier where we didn't get the product to produce and hence, it had an impact on top line and bottom line.

Overall, margins remained healthy at a 22% plus level, within our targeted midterm range, whilst absorbing some negative FX and the impact of that force majeure of a couple of million in the quarter. So overall, I think P&B, a solid performance.

Let's -- with that, move Taste, Texture & Health on the next page, please. Also, Taste, Texture & Health continued to perform well against the tough comps. I need to mention that by both P&B and TTH last year was a 13% growth in the quarter. Again, a good performance of 3% organic, fueled by synergies. Very pleased with the development of the pipeline there. We keep on calling that out, at the half year, if you recall or look at your notes, we quoted a little under EUR 400 million. That has meanwhile grown towards EUR 500 million. So an encouraging step-up as one would hope, and that is what we're steering for. But as a CFO, I'm keen to see the invoices go up and also that continues to trend up nicely quarter after quarter. We've meanwhile invoiced a little over EUR 150 million. which translates into a realization rate of well over 40% now in TTH, and that continues to do well.

Then looking a bit at the segments. Dairy, Baking [ and Pet Food ] continued to perform well, with good growth in the quarter. On the global accounts, a bit similar to P&B, we've seen a bit of softness with some careful order intake. I think they're carefully managing and navigating inventories through the chain whilst looking at their own growth volumes, and that's something that we see coming across also a bit at the larger regional accounts impacting the quarter and will probably carry a bit into Q4.

If we look at it from a margin perspective, very happy with the development there. Overall, another strong quarter of performance. Again, when adjusting for the FX and the divestment of the yeast extract business to Lesaffre, a 10% step-up in the business organically, which is encouraging to see, and it's largely in line with the half year performance as well. So a very good step-up in absolute EBITDA in Taste, Texture & Health, but also the margin. I mean, 20.6%. You know I've explained that a few times, but I always comment on it. The Lesaffre deal is a bit dilutive in '25 only given the fact that we still need to supply the product throughout the year at cost. If you adjust for that, the margin is now nicely into the 21%, similar to Q2, which is in line with our guidance and the trajectory that we want to see in the business. So a continued good development on that front.

Then moving to Health, Nutrition & Care on the next page. Also here, a continuation of the growth story. Go back -- we've been back to growth since mid-last year, and we've been growing quarter after quarter, not only top line, but also bottom line and margin. I think that has to go hand in hand. Here, another quarter with growth driven by ELN, which is benefiting from the HMO. We've been talking about receiving customer acceptance and clearance in China that is nicely coming through in line with expectation. And we're happy to see that we're moving forward on HMO starting Q3.

Also Dietary Supplements continued the steady recovery that we've seen throughout the year, and that is continuing into the third quarter. Biomedical was robust throughout the year. Eye Health was a bit softer. There, we see, especially at the retailers, a bit of more cautionary inventory management. I think then the amount of product on the shelves is thinning a bit on the back of some uncertain data around consumers, especially in the U.S.

As said, EBITDA margin and absolute EBITDA showing a nice step-up. Here also, you have the FX impact and the divestments. The organic growth is nicely up, 12% in the quarter, closer to 20% in the year, which is a very nice improvement. But what I find very important is the constant improvement in margin, a 2% step-up versus prior. And Q3 was 19%, and we expect a further improvement going into the fourth quarter on that front.

Then last but not least, Animal Nutrition & Health. On the next page, please. So overall here, you see a flattish growth, negative volume and a positive price. The negative volume is coming from the essential products, the vitamin business. You heard Dimitri say about declining prices in the quarter. In such an environment, customers typically hold back on their order pattern. It had an impact on the group and certainly here in ANH. Overall, on the contrary, Performance Solutions continues to hold up nicely and perform well as they've done throughout the year. So we're pleased with that. And from an operating performance, the margin is up and also a nice organic step-up in EBITDA, predominantly on the back of our self-help measures with the vitamin transformation program. So overall, EBITDA was up EUR 86 million. But given the falling prices, here, we're also guiding for a lower Q4 on the back of that volatility now that the force majeure has ended in the quarter.

I think with that, Dave, let's leave enough time for Q&A. So back to you.

I think we're ready for Q&A. Maybe as a reminder, sell-side analysts who want to ask questions in this Q&A session have to be registered the questionnaires' questions link, which they can find on our website in the Financial Calendar. [Operator Instructions]

And with that, operator, we can start and please give us the first question.

[Operator Instructions] The first question is from Lisa De Neve from Morgan Stanley.

I have two. One is on the full year guide. Can you give us an idea in terms of which trading trends that have [ prospired ] in the third quarter you're seeing lingering into the fourth quarter? Would just be a good idea to sort of get some sense of where Fragrance Ingredients, where Beauty & Care, sun filters are trading into the fourth quarter? That's my first question.

And then secondly, just on Health, Nutrition & Care. Can you share what's driving the strength in Early Life and whether you have seen any HMO-related customer launches in China? And if not, if that's something you would expect maybe to see coming through over the next 2 quarters?

Yes. Indeed, thanks for those questions. Let me give you a bit of color on the businesses on Q3 into Q4. And then at the end, also take HNC and indeed, like you said, HMO's impact helping us on the ELN side.

So let's start with Perfumery & Beauty. I think Ralf already alluded to it. The 2% in Q3 compared to an 11% volume growth as a starting point, we've seen good conditions throughout the year in Fine Fragrance, in Consumer Fragrance and Ingredients. Beauty & Care was impacted, like Ralf was saying, on sun filters and the force majeure of our supplier in Aroma.

Let me dissect that a little bit. Fine Fragrance growth is normalizing after a very strong period, but still at high single-digit growth rates in Q3. Consumer Fragrance, slightly softer in Q3 at low single-digit rates at the back of cautious behavior, predominantly at our global key accounts in the current uncertain environment. And Ingredients had a good mid-single-digit growth in Q3.

So what do we expect for Q4? I think we do see similar patterns and customers are managing their year-end inventories a bit more than usual in this uncertain environment. However, if we look at the -- as I earlier said, look at the end user and retail market data, they're not that bad. They're still pretty okay. So we need to see how that plays out. But for Q4, we expect the same pattern from August and September. Remember, July was still pretty okay. August and September, we think that will go into Q4 and therefore, for Perfumery & Beauty with the sun filters sequentially improving, but we still expect some destocking in Q4 while being back on growth in '26, but not in '24 -- not in Q4 for '25. We expect for the quarter a low single digit for Perfumery & Beauty.

Then a bit of color on TTH. Q3, 3%, here, against -- yet again, a high comparison of 13% volume growth. I think if you compare the numbers, you can clearly see that TTH has outperformed the market with that result, in line with a parallel good, continued step-up in EBITDA. So it's not only the top line, but it's also the leeway to an EBITDA bridge where we basically have in Q3 at 20.6%, where the yeast extract, that Ralf has alluded to, if you correct for that, it will be even above 21%. So we're on a nice trajectory there.

For Q3, we've seen big accounts a bit more cautious in order patterns, especially in Asia. So this is what we see for TTH. We also here need to see that the end consumer retail that are still looking pretty solid. So we need to see how that plays out. whether it's only a destocking or a fundamental trend. But for Q4, we expect the same circumstances for August and September to move into Q4 and therefore, guide for a low single digit for Q4 in TTH.

Now then a few words on HNC, a fantastic trajectory on EBITDA quality. I think we are -- for the 5 quarters in a row, we are continuing a good recovery. Here, indeed, a strong ELN, helped by product launches of HMOs. But this obviously still needs to span out. So we saw see some positive effect. But this is ramping up, and approvals take a while, then product launches need to be in the market, and then we start selling. But it's definitely helped by HMOs for ELN.

Backed up by a good solid growth in Dietary Supplements. Also here, a bit more cautious behavior from our customers. But in this case, not in Asia as for TTH, but more in the U.S. And we've seen the businesses in HNC, which are U.S.-based, being impacted a little bit by the cautious behavior of our consumers and customers in North America. So also here, for Q4, similar pattern moving into Q4, and therefore, you should expect a low single digit for Q4 for HNC as well. I hope that gave a little bit of color, including your HMO question.

The next question is from Nicola Tang at Exane BNP Paribas.

I wanted to ask about Fragrance Ingredients, where you said you continue to see strong performance here. I know several of your peers have been talking about weaker conditions, including increased competition from Asian players. Is this something that you're seeing as well that it's being offset by something else that you have there? Or do you not see this increase in competition? Can you sort of help us understand the difference?

And then the second question, you mentioned softer demand was mainly the global accounts in Consumer Fragrance and TTH. Is this softness solely related to ordering? Or are you also seeing a bit of softness in terms of launch activity and kind of willingness to innovate? And therefore, how should we think about sort of your pipeline and sort of top line drivers going into next year?

Yes. Thank you for those questions. And good that you ask me about the pipeline because absolutely, we don't see any changes in the pipeline. So that's also why we say we need to see how this spells out. The brief and the innovation pipeline is still full. So the number of briefs are definitely up to par. We don't see any hesitation on briefs coming in. So this is predominantly the cautious behavior on ordering at this moment. So remember, like we did in Q3, we're pretty transparent. We try to be with you, what we see in the market, and that's also what we want to do now for Q4 and for the future. But this is what we see in the ordering pattern. Briefs and innovation pipelines are still strong.

Then to your question on Ingredients, well, before I answer your question, let's contextualize a little bit what we've done with Ingredients. Remember, when we merged, we had a EUR 1.1 billion ingredient part in that Perfumery & Beauty area. with Pinova not being restarted, we walked away from that more commodity-like ingredient play. We still have also optimized the Ingredients more in the industrial application area. So with Pinova and the optimization, we moved that EUR 1.1 billion more closer to EUR 800 million, a deliberate choice to be more in the top end of the ingredient market. And therefore, we walked away from commodity type molecules. Well, therefore, we do see still quite some growth.

Secondly, the Chinese are moving in more in the big molecules where the economies of scale are playing. So these are molecules like menthol, citral. We're not in those. So these are the ones where we sometimes even benefit that they come because we buy some of their ingredients from China, and therefore, it helps our raw material costs.

So it's a different story. It's a different game. We already anticipated on optimizing the Ingredients. Sometimes also a question from you about the terpene business. But this business, we've also closed with Pinova. We still have 13 molecules, but those are the specialty molecules, as part of the ingredients of Perfumery & Beauty, which are all biobased. So you need to compare apples with apples. So therefore, we have seen a solid mid-single-digit growth on Ingredients because we anticipated on making that product portfolio more premiumized already 1 to 2 years ago.

The next question is from Charles Eden at UBS.

Just one -- further one for me, please. Just on the EUR 90 million FX headwind you're seeing in 2025, is the exposure pretty proportionate across the divisions? Or is there a sort of outsized impact in ANH? I'm just asking because the sales and manufacturing for vitamins, et cetera. I guess, another way, what I'm asking is, how much of the EUR 90 million headwind relates to the ANH division, maybe let's put it that way?

Charles, always direct in the question. That's always helpful. Normally, we apply a bit of a rule of thumb that 2/3 is in the core and about 1/3 is in ANH. I would apply that now as well. Maybe to give a bit of context, I mean, FX swings are obviously linked to the dollar, a bit on the Swiss here. Because normally, they kind of go hand in hand, but now the spread has widened, which is causing that adverse effect. And whilst ANH doesn't have a big U.S. dollar exposure, it's more the Swiss franc, as you say. There's also the Brazilian real and the like that is more impacting that. So on the balance, let's say, take about EUR 55 million, EUR 60 million in the core business, and the balancing element in ANH as a guidance for the full year.

The next question is from Alex Alexander Sloane from Barclays Bank.

The first one, just actually going back to the outlook for the core business in Q4. Thanks for all the color there. I mean just thinking about that low single-digit organic, is that also the right kind of exit rate to be thinking about 2026? Or would that be too conservative given it sounds like in that Q4 outlook, you're embedding some kind of one-off destocking? So I guess the question is, kind of in '26, could we get closer to the 5% to 7% medium-term target that you have for the core business [ ANH ] from that low single digit?

And the second one, just in terms of vitamins. Obviously, I mean, if you're not able to conclude the ANH process in the next 6 weeks. If we're thinking about 2026, is annualizing the Q4 run rate, that's implied by the new guidance, a fair assumption at this point? Or do you think that's too conservative that vitamin prices are sustainable levels where we are today?

Yes. Let me start there. So thanks for the questions, Alex. If we look at the core, I think we always want to be clear in terms of our guidance that we've done. Also if you're looking at Q4, I think Dimitri gave a good insight on the dynamics per BU and what drove that. And also looking back at Q3, where we had a good start in July, and then we've seen that weakness coming through a bit.

With what we've seen now also looking a bit at October, we see that behavior of August, September translating into the fourth quarter. But with that, also visibility has reduced somewhat. We've been speaking about that as well. We have a visibility of about a month.

If we look at the underlying data, and I think that is important what Dimitri highlighted as well, if you look at some of the consumer spend, if you look at the credit card spend and the like, you don't see that change in behavior at that front. So hence, also when engaging with customers, we're close to them, it's more the cautionary behavior and saying, look, we don't know exactly what's ahead of us. But in this time, looking also at where we are in the year, we're managing also carefully our ending position of the year, and everybody is slowly looking into 2026.

I think in terms of translation, I wouldn't copy the exit rate of Q4 going into '26. I think to your words, that would be a bit too harsh. I think over time, the fundamentals of each of the businesses are in place. If you look at P&B, the trends are there continue to stay. I mean there's a big show going on in the Middle East where we're present as well. We see the same dynamics and good demand in that space. So all those trends are there.

If you look at TTH, same dynamic, strong pipeline from a synergy perspective. We expect that to translate into '26 as well. And in HNC, we've got good, continued growth momentum and a step-up. I think we're seeing some short-term pressures, but I think it's too early to copy that into '26. And with the fundamentals in place, we're well placed in the midterm target from a midterm target position.

Then maybe tilting to your questions around ANH and vitamins. As you'll appreciate, we're working on a deal, and that is our focus, and we aim to conclude that in the fourth quarter. So let's not entertain a lot of what-if scenarios. We'll focus and we'll mention something as soon as we've got something to communicate on that front.

The next question is from Martin Roediger from Kepler Cheuvreux.

Two questions. First, on the segment, Health, Nutrition & Care. You talked about ongoing recovery in Dietary Supplements, while Eye Health experienced softness because of the retailers. Can you provide some color why both develop contrary to each other? I fear that both could be adversely impacted by the worsening consumer confidence in North America. So maybe any color if Dietary Supplements could be also suffer going forward?

And secondly, just a clarification question on the one-off costs in Perfumery & Beauty. I understood that you said a couple of million euros effect in Q3 due to that force majeure of the supplier. Is that issue solved now, so there is no effect anymore in Q4?

Let me take that one-off, and you take Eye Health and Dietary Supplements. So the one-off, yes, that has lifted. The force majeure was actually earlier in the year, but then it took long for the supplier to start up. And hence, we first did eat into our inventories and -- but then our production was impacted. So it's not a huge impact. It's a couple of million as on the one hand of the missed top line. At the same time, the fact that we had to delay our startup of our plant, which usually triggers a bit of idle cost. So -- but that has meanwhile lifted. So that's gone. So we shouldn't see an effect going into the fourth quarter.

We need to build up stock a bit, but that shouldn't be too big of a concern on that front. So we're happy that we're back on our feet on that front. But it did have an impact in the third quarter that impacted the overall growth, hence, us calling that out. Dimitri?

Yes. Maybe a little bit on Eye Health and Dietary Supplements. So thanks for those questions. Dietary Supplements, remember, your question is possibly a bit related to the fact that we had, during COVID, the cost inflation and that people were backing down on buying Dietary Supplements because they became relatively expensive.

But the cost part has come down rapidly. So I think the margin-based type of discussions which we had earlier are not there. So the cost of selling Dietary Supplements are at a normalized level. That was the issue which we encountered during COVID and post-COVID. Dietary Supplements is very strong. I think the health awareness is absolutely there. So we've seen throughout the period that Dietary Supplements is really holding with nice growth areas.

Then, on Eye Health. Remember, Eye Health is an area where we invest in new products in women's health, but also in the menopause relief. So if you have any problems with menopause, then you're really call upon to buy the brand Estroven. That is really helping the growth of Eye Health.

Overall, also prebiotics with Culturelle. But obviously, there, that whole cautious behavior from the retailers is impacting it. That's what we're flagging. So you can't compare Eye Health one-on-one with the Dietary Supplements, partly because of the pricing of Dietary Supplements not being impacted by the high cost energy prices earlier. So there are still products which everybody is buying. Eye Health is really into new segments and growth for new markets. But obviously, in a more cautious behavior, everybody is holding back on that a little bit.

We've seen that happening in Q3. We expect that to be continued in Q4. But the fundamentals are there. I think if you look at the pipeline of what we have in terms of briefs, but also new products, we feel that this is something which will fade away over time.

The next question is from Chetan Udeshi from JPMorgan.

Can you hear me?

Yes.

I had two questions and thanks for the update on Q4 top line. I was just wondering, is there any implication on the EBITDA? Usually, you'd see the seasonal decline in P&B and TTH anywhere close to high single digit, 10% sequentially. HNC tends to be up sequentially. I mean, are you thinking any differently about the -- that seasonal changes that we usually see in Q4 EBITDA in different divisions?

The second question I had was, if I'm not mistaken, you updated the tariff cost impact to EUR 150 million through third quarter. How much of that is actually coming through in third quarter numbers itself? Because you have inventory, and I suppose majority of the products sold in Q3 are coming from the stock that was produced in H1. So how much of the -- sorry, the tariff impact is yet to be seen? And how are you dealing with that?

And if I can squeeze one easy one. I'm assuming you should have seen progress in working capital reduction through Q3. So any update there would be very helpful.

Yes. No, thanks for your questions. And let me get a go at it and then see whether there's anything to add from Dimitri. So with respect to your seasonal pattern, that's an easy one. That will be similar to what we've seen over the past years. So when also Dimitri gave the comment around the low single-digit outlook, that's in the comparison with prior years. So the normal seasonal effects are there. So you're absolutely right. So we -- we're referring that on a year-over-year comparison in line with prior years.

Then on the tariff one. I think that's an important question, and it's good to spend a bit of time on that. When we initially called out, we had a first phase of tariffs that impacted EUR 100 million and then afterwards, when the new tariffs were imposed on Swiss and India, we lifted that up to EUR 150 million. Now if you look at that first phase of EUR 100 million, we navigated largely through that. We worked with our customers, looking at alternative supply chain movements, looked at formulations and the like. And we've been able to largely mitigate that impact fully towards the customers. And the remaining smaller part of that, we meanwhile passed through to our customers. So that first EUR 100 million is dealt with.

Then that uplift to EUR 50 million, that's on the back of the latest outlook of the increase in Switzerland and India, as mentioned before. And we'll do the exact same thing. We'll again look at possibilities and options to mitigate that as much as possible. But whatever we can pass through, we've been transparent to that also to our customers, we will pass that on. So over time, we expect to navigate through that. And you're right, as part of the mitigating measure, you work with your inventories and manage that through. But as I said, we will have not an EBITDA impact from that first EUR 100 million, and we'll take the same approach working through that other EUR 50 million that is now there. And again, let's also still hope that there's space for a better world and a better deal. So let's see what it eventually will turn up to, but we'll make sure that we'll navigate through that as well.

Then maybe a few comments on working capital. Working capital continues to be an area of attention. At the half year call, I called out that we are running at a bit of an elevated inventory level. Also for two reasons. On the one hand, navigating through tariff environment, but also dealing with a bit of the volatile environment. We want to make sure that we continue to supply our customers where needed. So that is something that we've been working through. We do expect that to ramp down.

If you look at the moving pieces of working capital, receivables very much in line. Normally in Q3, you see a typical seasonal impact of a few days more DSO. Usually, year-end is always the best. So there's a delta of 2 to 3 years, but we will be in line with what we've realized last year.

Same for payables, we're exactly fairly stable on that front, in line with our normal position of a little over 100 days. I think we're leading in terms of working capital management on that front. Inventory is -- we're carrying a little over EUR 100 million to EUR 150 million higher volume, including some higher prices. That is something that we need to work on, and that has an impact of about 1% on working capital, but we're committed to move that down over the period as well.

So all in all, pleased with the performance in the third quarter, as I said, cash performance was good, and we'll continue to make sure that we have a similar performance in the fourth quarter as well.

The next question is from Eric Wilmer from Van Lanschot Kempen.

Can you hear me?

Yes, we can.

Back at the Capital Markets Day in Paris in 2024, you highlighted you want to accelerate Beauty & Care. Since then, we've seen a structural attention of [ Asian factors ]. I believe this is in terms of the Beauty division. So I was wondering regarding your stance for this business. To what extent do you think it makes sense to invest in it, or perhaps rationalize it, or perhaps even dispose it?

Yes. Thanks for that question. And let me make it very clear. We did an all segment analysis where we basically based on growth and differentiation capability, chose a few winning segments. Beauty & Care is absolutely one of those. We wanted to accelerate that growth.

Let me remind you a little bit that Personal Care has sun filters, and that is basically being impacted for this year. If you go a little bit back, '23 was a fantastic year, '24 started pretty okay for sun filters as well. And customers are preparing for a good second half '24 and '25 as well. And then it moderated a little bit. That's the reason why they had a little bit too much of stock that need to be reworked. That's in that process as we speak. And the moment that they rework the stock and out of stock, they can order new sun filters where we are one of the main suppliers. So that's the sun-filter part.

If you take a 5 years period, it is a fantastic market to be in. If you look at innovation pipeline and regulatory requirements, this is a place to be, and I think we're well positioned to do that.

Secondly, Personal Care is not only sun filter. You have hair care, you have skin care. And let me remind you that also during that CMD, we've launched a fantastic product, which was basically attacking zombie cells on your skin, which is delaying and sometimes even bringing aging of your skin to a standstill. We're launching that in the market as we speak. and that creates quite some potential for growth.

So Personal Care is not only sun filters, but even sun filters itself, it's an interesting market to play in. But if you look at our brief and pipeline, it's one of our growth areas where we're willing to invest in organically and maybe over time also inorganically.

The next question is from Artem Chubarov from Rothschild & Co. Redburn.

Hopefully, you can hear me well. First, on HMOs in China, exciting to hear about the news, but is there any way to quantify what magnitude of sales we're talking right now? I appreciate, it's still early days. And where do you see this business progressing going forward? And second, on synergies and TT&H, again, quite encouraging to see the pipeline growing to EUR 500 million right now. But would you remind us how it converts into sales? Is there any lead time we should be -- we should keep in mind? And on synergies impact in 2025, in TT&H, your volumes are up 5% year-to-date. So is there any way to quantify how much of that has come from synergies?

Thank you for those questions. Ralf will take some of the synergy parts. Good questions to give a bit of color. HMO China. So it's clearly a category where we expect that we will continue to grow to above EUR 100 million of sales levels with interesting quality of margins, obviously. Let me not, because of introduction rates today, give you a lot of numbers around it. As you can see, if it's a novel ingredient in an infant nutrition market, then everybody is waiting to see what we're going to say about it.

So I really am excited about it, and I'm willing to give you all the numbers and the great stories, but I will refrain from doing that for the benefit of these unfinished. But overall, I can say this is a category where we will grow above EUR 100 million with very good margin rates.

Then maybe, Ralf, a bit of color on the synergy on TTH?

Yes. No, happy. Let's start first with overall 5% volume growth indeed year-to-date on the back of 9% volume growth last year. I think we're outperforming market there, and that is because of the synergies. Synergies is contributing about 1.5% to 2% on the growth consistently every quarter. We've seen that also again into the third quarter and anticipate it should be a driver for above-market growth in the period ahead of us in TTH.

Taking a step back, Artem, because I think -- I appreciate the question around the pipeline. We're very encouraged by that indeed. A bit of background, maybe relevant in a minute. So overall, we started tracking the pipeline because the lead time typically in TTH is 12 to 18 months. And to get a comfort feeling about the delivery of the synergies. Overall, at the merger, we communicated that we're going to deliver EUR 350 million of EBITDA synergies, half of that from cost, half of that from sales. The costs have been delivered by the end of the year. So we're closing out that program. We're now fully focused on delivery of the sales synergies.

We needed EUR 500 million top line to do that, and 2/3 of that are allocated to TTH, where the biggest overlap and the heart of the merger is. And because of that lead time, we started tracking the pipeline and basically the win rate thereof. And you've seen the narrative change where initially from the get-go of the merger, we've been focused on the pipeline. We've then looked at, "Okay, how much of that pipeline are we actually translating into wins?" So that is something that we communicate as well. At the half year, we made good progress. At the Q3, that continues to increase as well. That's towards the EUR 175 million.

So wins in the pocket. And then those wins get translated into invoice business. And as a financial, that's obviously what matters. That's when a truck leaves the warehouse, and we actually get paid for that. That's, meanwhile, EUR 150 million as well. So you've seen that nicely coming through.

For the time being, we will continue to monitor and report on that pipeline development as well because it gives you a good feeling and gives you the same confidence Dimitri and myself have in our ability to deliver that synergy. Over time, we'll move to focusing on organic growth because as I said, it should just contribute to an above-market growth in TTH, and that is what we're experiencing. And once that is fully locked in and secured going forward, then at some point, we can stop talking about the pipeline. But today, it's relevant to give you the same confidence we have around our ability to deliver those.

We're approaching basically the hour. Yes. So let's have one other questionnaire before we run out of time. So operator, who has the last questions?

The final question is from Georgina Fraser at Goldman Sachs.

Do we need to sing for you?

Sorry?

We've got some inside information that it's your birthday.

That's right. Yes, birthday twins.

[indiscernible]

Congratulations.

Thank you so much. I appreciate that. So for my birthday treat, the question is, you talked about Fine Fragrance normalizing growth, but still growing high single digits. I'm sure you're aware and have analyzed a market leader saw accelerating growth in Fine Fragrance. Would love what your interpretation of is in the diverging trends in the Fine Fragrance performance of the market leader and yourselves? And what are you doing to catch up?

Yes. Thanks for that question. And indeed, let's go back on Fine Fragrance over the last years, we've delivered around a 6% CAGR growth. And I think that's in line with the mid-single digit. We're pretty happy with that. I think what you need to understand, and I think we've done that several times, is that P&B is Fine Fragrance, Consumer Fragrance, Ingredients and Beauty & Care. And I think we have a different portfolio with a larger ingredient part to it, which, by the way, is a deliberate choice to build a business model that is not only depending on creation, come up with great briefs, but also have it backed up by innovation in Ingredients. We feel that, that long term is a far more stronger and more sustainable strategy going forward. We need to invest in that. We have tuned our Ingredients to that, and we believe that, that business model -- that operating model is something for the future.

Secondly, we have a different methodology on how we report hyperinflation FX. I think we mentioned that a couple of times. So let's be careful if we compare apples with apples. And last but not least, I think it's clear that we are in the mid-pack of fragrances. So we're happy with it. But we're not outperforming, in sharp contrast to TTH, where we are outperforming the market. So we are working on outperforming the market on the fragrances from being in a good position. You know that in terms of portfolio, we will continue to work on the differentiation ingredients, which will take time to really differentiate that self throughout the chain, but it will work out for us going forward.

Secondly, you've seen that there's a lot of geographical growth. We are bumping that up as we speak. I think you're referring to people who make a lot of sales in the Middle East. We've also seen that. So we're also beefing up our presence. Our [ President -- I don't remember ], which now is there, as we speak on a great fair. But we also need to be aware that we also have made a strategic choice not to enter all segments in the Middle East. So we entered more in the high end, in the prestige part because we also feel that, that for the longer term is something which fits us well also in terms of briefs and pipeline and how we collaborate with our customers.

So I think we're in the pack, but we are doing everything we could to outperform on the longer term.

This concludes the Q&A session. I will now hand back to Mr. Huizing.

Yes. Thank you, operator. Before we finish, Dimitri, do you want to make a few closing remarks?

Yes, respecting time, let me keep it brief. Thanks, Dave. Let me sum it up. Our key strategic end markets in our core business units are demonstrating strong fundamentals. We do see end use and retail data keeping up. This positions us well for a strong growth with our unique portfolio, was highlighted a little bit in terms of the business model, ingredients plus creation together based on science-based innovation with a broad geographic footprint. We're fully committed to deliver on all items that we have under our control. That's reflected also in a step-up over EUR 300 million in our EBITDA on a comparable basis, and we remain focused on implementing and executing all aspects of our strategic agenda. We're making quite progress as we are building for the future.

With that, back to you, Dave, to close.

Yes. Thank you, Dimitri. And that brings us, of course, at the end of today's conference. Let me thank everybody for attending today's call on this very busy day for most of you, with a lot of people reporting. And as always, please do not hesitate to reach out to Investor Relations for any remaining questions you have.

And with that, I hand it back to the operator.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.